economics

State to cover 70% of cost of construction inflation

Government will also extend reduced 9% VAT rate for hospitality sector

Michael McGrath, the Minister for Public Expenditure, said that the real risk would have been to make no changes to the fixed price contracts because it would have been difficult to get any contractors to bid for new projects in the National Development Plan. Picture: Sasko Lazarov/RollingNews.ie

The government is to pay 70 per cent of the cost of construction inflation and extend the 9 per cent VAT rate on the hospitality sector to next year.

Michael McGrath, the Minister for Public Expenditure, has decided that the state will cover up to 70 per cent of the cost of construction inflation in recently signed public works contracts, with the contractors due to fund the remaining 30 per cent.

Paschal Donohoe, the Minister ...