By Padraic Halpin

DUBLIN, Oct 9 (Reuters)Ireland’s budget deficit is set to hit 6.1% of gross domestic product this year, Finance Minister Paschal Donohoe said on Friday, a narrower than forecast shortfall likely to give him room for more generous measures in Tuesday’s budget.

The government will look to support those hit hardest by COVID-19 restrictions in the budget for 2021, helped by state tax revenues having held up much better than expected and Ireland’s big export sector limiting the economic damage.

The finance ministry estimated early in the pandemic that a big fall in tax receipts and a huge increase in spending could lead to a deficit of 23 to 30 billion euros or between 7.4% to 10% of GDP.

Donohoe said the deficit would reach 21 billion euros, provided current COVID-19 restrictions were not tightened. A no-policy-change estimated deficit of 14 billion euros or 4% of GDP for 2021 will be updated next week when the government announces its budget stimulus measures.

“I want to emphasise that these figures are subject to an unprecedented degree of uncertainty with potential further change within 2020 and clearly the potential for significant change in 2021,” Donohoe told a news conference.

Next week’s budget figures will include a scenario outlining the impact of tougher restrictions to contain the novel coronavirus, he said. The government rejected a recommendation by its health chiefs to enter a second national lockdown on Monday.

In updated forecasts on Friday, Donohoe’s department expects to collect 18% more income tax than when they revised them down sharply in April, keeping the year-on-year decline in the overall tax take to 4% versus the 16% initially feared.

Bucking the trend in most tax categories, corporate receipts are forecast to jump by 14% year-on-year to hit a record 12.4

The federal deficit for 2020 is believed to have hit a record-smashing $3.1 trillion in 2020, well over double the highest deficit on record, according to an estimate by the Congressional Budget Office released Thursday.

The official figures from the Treasury Department are expected later this month.

Even before the pandemic, the deficit was on track to exceed $1 trillion for the only time since the four-year period following the Great Recession. The fiscal response to that economic downturn led to the previous record deficit of $1.4 trillion in 2009, but that number steadily declined until the mid-2010s.

Since President TrumpDonald John TrumpFive takeaways from the vice presidential debate Harris accuses Trump of promoting voter suppression Pence targets Biden over ISIS hostages, brings family of executed aid worker to debate MORE took office, the deficit has grown dramatically on the back of unfunded tax cuts and increased spending on both defense and domestic priorities.

But the advent of the novel coronavirus and the massive government response exploded the deficit this year, though the estimate is below the $3.3 trillion expected even a few weeks ago.

“Relative to the size of the economy, the deficit—at an estimated 15.2 percent of gross domestic product (GDP)—was the largest since 1945, and 2020 was the fifth consecutive year in which the deficit increased as a percentage of GDP,” the CBO report noted.

The Committee for a Responsible Federal Budget, a watchdog group, said the deficit had pushed the nation’s debt burden to 102 percent of GDP, surpassing 100 percent of GDP for the first time since World War II.

“It is hard to believe we now owe a full year’s worth of output,” the group’s president, Maya MacGuineas, said.

“We weren’t supposed to cross this threshold for over a decade, but here we

By Sam Holmes and Colin Packham

SYDNEY (Reuters) – Australia pledged billions in tax cuts and measures to boost jobs on Tuesday to help pull the economy out of its historic COVID-19 slump in a budget that tips the country into its deepest deficit on record.

Prime Minister Scott Morrison’s conservative government has unleashed A$300 billion in emergency stimulus to prop up growth this year, having seen the coronavirus derail a previous promise to return the budget to surplus.

Treasurer Josh Frydenberg on Tuesday announced A$17.8 billion in personal tax cuts and A$5.2 billion in new programmes to boost employment in a recovery plan aimed at creating one million new jobs over the next four years.

Those measures are forecast to push the budget deficit out to a record A$213.7 billion, or 11% of gross domestic product, for the fiscal year ending June 30, 2021.

“There is no economic recovery without a jobs recovery,” Frydenberg said in prepared remarks to parliament. “There is no budget recovery without a jobs recovery.”

Australia’s unemployment rate hit a 22-year high of 7.5% in July as businesses and borders closed due to strict lockdown measures to deal with the coronavirus.

While the number of deaths and infections in Australia from COVID-19 has been low compared with many other countries, the hit to GDP has been severe. Underlying the budget forecasts was an assumption that a vaccine would be developed in 2021.

Australia’s A$2 trillion economy shrank 7% in the three months ended June, the most since records began in 1959.

In its new projections, the government expects unemployment to rise to 7.25% by the end of the current fiscal year and then fall to 6% by June 2023. Australia’s GDP is expected to shrink 1.5% for the current fiscal year before returning to growth

WASHINGTON (AP) — The U.S. trade deficit rose in August to the highest level in 14 years.

The Commerce Department reported Tuesday that the gap between the goods and services the United States sells and what it buys abroad climbed 5.9% in August to $67.1 billion, highest since August 2006. Exports rose 2.2% to $171.9 billion on a surge in shipments of soybeans, but imports rose more — up 3.2% to $239 billion — led by purchases of crude oil, cars and auto parts.

The U.S. deficit with the rest of the world in the trade of goods such as airplanes and appliances set a record $83.9 billion in August. The United States ran a surplus of $16.8 billion in the trade of services such as banking and education, lowest since January 2012.

The politically sensitive deficit in the trade of goods with China fell 6.7% to $26.4 billion.

So far this year, the United States has recorded a trade gap of $421.8 billion, up 5.7% from January-August 2019.

Hammered by the coronavirus and its fallout on the world economy, total U.S. trade — exports plus imports — is down 15.1% so far this year to $3.2 trillion.

“Overall, trade flows remain subdued and the outlook is uncertain given a muted global growth and demand backdrop,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

President Donald Trump campaigned on a pledge to bring down America’s persistent trade deficits. He imposed taxes on imports of steel, aluminum and most products from China, among other things; and renegotiated a North American trade pact in an effort to encourage more production in the United States.

But the trade deficit won’t yield easily to changes in trade policy. As the U.S. economy recovers from springtime shutdowns, Americans are buying more imported goods