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A budget "unprecedented in size and scale" to meet the challenges of both Covid-19 and a Brexit trade deal has been unveiled by Irish Finance Minister Paschal Donohoe.

"From the ashes of the pandemic together we will build a stronger and more resilient Ireland," he told the Dáil (Irish lower house of parliament).

The minister said unemployment was expected to be around 10.25% next year.

There would be a budget deficit of €21.5bn (£19.5bn) this year, he added.

Last year, the Republic of Ireland ran a budget surplus but Mr Donohoe expects the deficit to be €20.5bn next year.

This would mean a national debt of €219bn or 108% of national wealth.

However, he said his budget would provide "more homes, improved healthcare and a special national response to climate change".

In advance of the budget statement, the three-party coalition government said its figures were based on the assumption there would be no EU-UK trade deal and against the continuing uncertainty about the economic implications of Covid-19.

The finance minister promised €8.5bn for public services hampered by Covid-19 and a €3.4bn recovery fund.

Mr Donohoe said because of the problems the hospitality and tourism sectors were facing, VAT for them would be reduced to 9% from 13.5% from 1 November until December 2021.

He told the Dáil there would be no broad changes to income tax, but the carbon tax would increase affecting the price of fuel.

The cost of a packet of 20 cigarettes would increase by 50% to €14.

The minister said he wanted to conclude on a note of hope and confidence, and quoted the Nobel Laureate Seamus Heaney saying that "if we can winter this one out we can summer anywhere".

The Shared Island unit in the Department of the Taoiseach will oversee a €500m budget over the next five years to improve north-south co-operation.

Taoiseach Micheál Martin described the funding as "central to the government's commitment to harnessing the full potential of the Good Friday Agreement".

"It also opens the way for investing in new all-island initiatives in areas such as research, health, education and the environment," he said.

Sinn Fein's finance spokesman described the budget as "indecisive, too slow to act and lacking ambition".

Pearse Doherty said the government had failed to provide certainty for workers at risk of falling off the cliff edge or to hospitals at risk of not being able to cope with Covid-19 rates.

He told the Dáil that €6bn had not been allocated because the three-party coalition did not know what to do with the money.