The State’s fiscal watchdog has warned that Ireland’s rapid growth in spending planned for next five years will leave the public finances in a “vulnerable” position.
Last year the Coalition published a Medium-Term Fiscal Framework which sets out expenditure until 2030.
Appearing before politicians today, the Irish Fiscal Advisory Council warned that the pace of spending growth was faster than any other EU country.
Its chairman Seamus Coffey told the Oireachtas Budgetary Oversight Committee: “The growth rate of spending in Ireland is planned to be almost double the average of other EU countries.”
He added that this followed a recent pattern and since 2019 government spending growth in Ireland has been amongst the highest in high-income European countries.
He also warned that if the surge in corporation tax was to remain at 2025 levels while spending rises Ireland would run a deficit from 2028 onwards.
In an opening statement presented to the committee Mr Coffey said €1 of every €8 in corporation tax will be saved.
Mr Coffey warned that the Government has failed to stick to its spending projections made in the Budget and instead expenditure has been much higher than expected.
He said: “There have been repeated spending overruns in recent years.”
He added: “Even when looking only one year ahead, spending has gone significantly beyond what was budgeted for.
“Spending in 2025 was €3.9 billion higher than budgeted for. It remains to be seen if the Government will stick to this multi-year plan for spending.”
The Irish Fiscal Advisory Council warned State could face a “hole” in the revenue it collects from duties on fossil fuel as more motorists transition to electrical vehicles.
At present the State charges excise, VAT and carbon tax on petrol and diesel.
However, as sales of fossil fuels fall it will see the revenue collected by State fall.
