The European Commission said last week that Ireland has submitted a request to modify its application for the funding.
Under the proposed modification two of seven investments included in the original plan are being removed from the plan – these cover private investments in energy efficiency and the installation of renewable energy sources, as well as supporting access to the labour market for jobseekers who have been unemployed for more than six months.
It is now understood the programmes will go ahead but the Department of Public Expenditure and Reform (DPER) will cover the costs out of Ireland’s own budget.
The funding gap is but may be a signal of further funding blocks to come.
In June Ireland’s allocation from the Recovery and Resilience Facility was cut from a potential maximum of €989m to a top allocation of €914m. The cut is based on Ireland’s comparatively better economic outcome in 2020 and 2021 than initially foreseen. The EU uses the standard gross domestic product (GDP) measure as the basis for comparing the wealth of member states. That has long been distorted in the Irish case to flatter the true size of the economy, increasingly so since 2015.
Given the best-in-EU official growth rate here in 2022 further revisions to supports from Brussels under other programmes may well see the same impact.
Ireland’s modified plan now has to go back to the European Commission to assess whether it still fulfils all the assessment criteria.
The full Irish plan covers 16 investment projects, including a €164m upgrade of Cork’s rail line, a €142m project to digitise the health system, a €27m work placement programme and a bog rewetting scheme.
It was submitted in to authorities in Brussels in May 2021 and approved in September the same year. But the Irish Government only followed up with a formal payment request for an initial €324m of funds in September this year.
That delay was in part because the money is subject to implementation deadlines and reform commitments, and so project delays here for pre-approved schemes mean the funds cannot be accessed.
In May this year the Government asked for an got permission from the Commission to postpone deadlines on two approved projects, including one social and affordable housing scheme, due to “delays in the construction process and other implementation issues”.
Given that the State is set to run a €8.8bn budget surplus this year, according to the Budget 2024 projections, and expects this to rise to €14.6bn by 2026, the loss of EU Covid funding will not have a significant impact on the country’s finances.
The RRF is the biggest ever EU investment and runs to 2026.
