Tánaiste admits Government's Stay and Spend scheme 'isn't much use' to businesses at the moment

Plans to cut the Pandemic Unemployment Payment rate in February could be pushed back if the country is still facing tight Covid-19 restrictions, Leo Varadkar said.

The Tánaiste said the Government will look again at the decision to lower PUP rates next year.

"We set aside 3.4 billion in recovery funds to help boost the economy if Brexit and Covid goes the wrong way," he added.

"We've also set aside 2 billion in a contingency for health and social welfare if they need more money.

"So the budget does provide the money for that deadline to be moved, if the pandemic isn't in a much better place by then."

Mr Varadkar also agreed that the Government's Stay and Spend initiative "isn't much use" to businesses at the moment because of restrictions.

"We're telling people there to stay in their county, not to take trips around Ireland, unfortunately," he added.

"We're leaving that in place but we're also doing the VAT cut, which actually isn't much use to the industry at the moment either.

"But we decided that we would put in place from November until December of 2021, so it will be there for all the next year and if and when and they will get back up and running again, they'll have both incentives."

Mr Varadkar said he hopes people will not face tax rises in the coming years following the Government's huge spending plan announced on Tuesday.

"A lot of money is being borrowed, over 20 billion euros this year and next year," he added.

"If we can get the economy going again, if we can get people back to work, the cost of things like PUP will fall and people will pay income tax again, we might be able to close that gap without increasing taxes."

He added that it will depend on welfare payments like PUP, the outcome of Brexit, and how quickly the economy bounces back.

He also said there are huge amounts of savings in bank accounts, and urged people to spend local in the months before Christmas.

Mr Varadkar said tighter restrictions in border counties might be introduced, depending on any decision announced by the Northern Ireland Executive later today.

Northern Ireland is set for a period of intensified coronavirus restrictions after executive ministers agreed to closures of schools, pubs and restaurants.

Mr Varadkar said: "We will hear what happens in Northern Ireland this morning and then we will see if we need to respond to that, particularly in relation to the bounder counties.

"Nphet will meet on Thursday then we will consider their advice after that and make further decisions at that point.

"The main reason as to why restrictions might be tightened in border counties is not just what is happening in the north, it's the incidence rate as well which is the highest in the country.

"We will need to respond to what happens as best we can, we tried to co-ordinate with Northern Ireland but the Northern Ireland Executive hasn't agreed to an all-island approach."