The stage has now been set for Budget 2021.  

The White Paper published last night shows a budget deficit this year of €21 billion and an estimated €14.5 billion next year. That's all before any decision on Budget day to further increase spending.  

And it does not take into account any tightening of public health restrictions.  

If we go back to the mists of time that was January 2020, the Department of Finance’s Medium-Term Fiscal Strategy published in advance of the general election campaign envisioned a 2021 budgetary package of €3.6 billion with an 'unallocated’ (remember the fiscal space?) amount of €1.6 billion to squabble over.  

How times have changed.  

Budgets normally frame the policy choices a government chooses to introduce in the following year, at least the choices involving money.

They also mark and adjust the financial interactions most of us have with government through the tax and welfare system.

I have often heard people question whether such a fuss should be made about Budget Day.

Well, my view is the fuss is entirely justified. It is one formal day of reckoning in the year where the mechanics of our society are on display in glorious detail. And that alone deserves our attention.

Both the departments of Finance and Public Expenditure and Reform have had to frame the Budget over an economy tottering on violently jarring tectonic plates.

So far this year, we’ve had an economy running at full employment in January and February with tax revenues rolling in.

We all know what happened next.

The economy was shoved into the deep freeze and unemployment shot to 30%. Public expenditure on health and social protection went through the roof.

However, through the summer, as we crept into the uncertainty of coping with Covid, the picture of the economy that emerged was different to the apocalypse glimpsed in the dark days of April.

There was already a gap between the exporting sector dominated by multinationals and the domestic sectors of the economy. But this gap has become a chasm during Covid.

It is well documented now by everyone from the Department of Finance to the Central Bank and the ESRI that we are dealing with a tale of two economies.

Demand for certain medicinal and pharmaceutical goods went up during the Covid crisis and demand for many computer services has remained strong.

We are fortunate that over the years, the efforts of the IDA and a consistent industrial policy has ensured we have a diversified economy with strengths in sectors that have actually benefited from the pandemic.

That has underpinned growth, as measured by GDP. It has helped shore up tax revenues, particularly income tax.

Our mysterious friend, corporation tax, chipped in an unexpected €2 billion or so which also proved timely.

But before we get carried away, the CSO updated its figures this week to reveal the domestic side of the economy collapsed by almost 20% at the height of the pandemic during the second three months of this year.

That’s far deeper than at any time during the financial crisis.

Beneath that figure are the thousands of people who lost their jobs in sectors like accommodation and food where 91% of people employed were either on the Pandemic Unemployment Payment or supported by the Temporary Wage Subsidy Scheme in April.

An analysis by the ESRI showed how value added in the arts, entertainment and recreational sector collapsed by an incredible 72% in the first half of the year.

Airports are empty and buses half full.

As the country remains at an elevated level of restrictions, certain sectors will continue to have a very tough time.

And therein lies the conundrum facing the government in next week’s Budget. 

It has outlined how it is prepared to borrow at least €14.5 billion to support the economy next year. But how can it direct support to the sectors that need it most? What schemes will work?

The Department of Finance last week highlighted the billions of euro in savings built up this year (€7 billion and counting...) lying unloved, attracting negligible interest in people’s bank accounts. Unlocking that would release a torrent of spending.

But that can only be spent in a world where Covid-19 is under control.

In the meantime, it's worth remembering the 'Tale of Two Economies' metaphor is a riff on Dickens' novel 'A Tale of Two Cities'.

One of the cities is Paris during the French Revolution.

While our liberty is temporarily and necessarily restricted, equality and fraternity are needed now more than ever.

It's just that it will not come cheaply. Time to clear the fiscal space.