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Irish Post
18 hours ago
- Business
- Irish Post
IFAC criticises Ireland's budget plans
IRELAND'S budget plans have drawn criticism from the Irish Fiscal Advisory Council (IFAC), which says the government is risking economic instability by ignoring basic principles of sound fiscal policy. In its assessment of the newly released Summer Economic Statement (SES), the independent watchdog warned that the government's intention to reduce the size of the 2026 budget package if global trade conditions deteriorate is a serious misstep. IFAC argues this approach runs counter to standard economic advice, which calls for countercyclical policy: increasing support when the economy is weak and scaling back when it is strong. 'This is exactly the opposite of standard economic advice,' the Council said, warning that the government's strategy could leave the public finances dangerously exposed. The criticism has been echoed by Barra Roantree, assistant professor of economics at Trinity College Dublin, who compared the current strategy to the fiscally reckless policies of the early 2000s. 'Committing to ramp up current expenditure if the good times continue, but row back if things get worse, is precisely the sort of pro-cyclical policy that the current minister for finance has himself said we should avoid,' he said. Roantree warned that this policy risks stoking inflation and could leave Ireland vulnerable to sudden declines in corporation tax receipts. If that happens, the government may be forced to abandon capital investment projects, even if they are already promised. Originally, the government planned to increase spending by €3bn in 2025. That figure has now been revised up by €3.3bn, bringing total expenditure to €108.7bn. But IFAC says that even this may underestimate how much the state will actually spend. Based on spending patterns from the first half of the year, the Council believes current expenditure could end up around €1bn higher than reported. The Council also warned that this year's overspending is likely to spill into 2026. 'This all points to poor planning and budgeting,' it said. Finance Minister Paschal Donohoe has also announced a €1.5bn tax package for the upcoming budget, including a controversial proposal to cut the VAT rate for the hospitality sector from 13.5% to 9%. Roantree described the cut as 'an expensive and economically illiterate policy' that will limit the government's flexibility going forward. Despite a strong economy, the government is forecasting a deficit of nearly €11bn next year, which equates to 3.2% of Gross National Income (GNI) once windfall corporation tax revenues are taken out. IFAC has repeatedly criticised the lack of a long-term fiscal framework and says the government still hasn't defined a sustainable pace of net spending growth. One of the few areas where the Council was more positive was the National Development Plan, which it said has 'ambitious targets' that, if executed properly, could help address Ireland's infrastructure deficits. Of the 88 large-scale projects originally scheduled for completion between 2020 and 2025, just 77 are now expected to finish on time. See More: Economy, IFAC, Infrastructure, NDP, SES
Extra.ie
20 hours ago
- Business
- Extra.ie
State spending watchdog hits out at 'poor budgeting' by Government
The State's spending watchdog has accused the Government of 'poor planning and budgeting' in its spending plans. The Irish Fiscal Advisory Council (IFAC) has repeatedly warned about the dangers of relying on windfalls from large amounts of corporation tax. On Tuesday, Minister for Finance Paschal Donohoe unveiled the Summer Economic Statement (SES), which sets out €9.4billion in spending plans for Budget 2026. On Tuesday, Minister for Finance Paschal Donohoe unveiled the Summer Economic Statement (SES), which sets out €9.4billion in spending plans for Budget 2026. Pic: Leah Farrell/ The IFAC, which was established after the financial crisis to monitor Government budgetary planning, yesterday released its analysis of the SES. It shows that despite the economy performing well, the country would have a budget deficit of almost €11billion if windfall corporation tax receipts were excluded. The SES pledged a total budgetary package of €9.4billion, an increase of €1.1billion from last year's Budget. Some €1.5billion is being committed to tax cuts, with about €1billion of this being spent on reducing the VAT rate for the hospitality sector. Pic: Shutterstock Some €1.5billion is being committed to tax cuts, with about €1billion of this being spent on reducing the VAT rate for the hospitality sector. The remaining €7.9billion will be spent on increases in spending, up 7.3% on last year. The projections are based on the unlikely scenario of no tariffs being imposed following the conclusion of negotiations between the EU and the US in the coming weeks. The SES said that if there is a 'deterioration in the tariff landscape', the Government will 'recalibrate its fiscal strategy'. But the IFAC said that this runs contrary to 'standard economic advice' against reducing the level of spending. It wrote: 'The SES states that if there is a deterioration in the tariff landscape, the Budget 2026 package would be smaller. This is exactly the opposite of standard economic advice. 'Countercyclical policy means giving more support when the economy is weak and less when it is strong.' The IFAC, which is chaired by economist Professor Séamus Coffey, wrote that overspends were 'inevitable' and estimated that spending would increase by €1billion more than planned for in the SES. The watchdog's analysis shows that spending is set to double between 2025 and 2026 and that it expected the figures outlined to increase. 'Budget 2025 had planned a €3billion increase in spending,' it said. 'Yesterday [Tuesday], this was revised up by €3.3billion, meaning the actual 2025 increase will be more than double the original plan. Based on spending data for the first six months of the year, this upward revision is likely insufficient. Analysis by the council suggests current spending is likely to be around €1billion higher than the SES figures.' The IFAC predicts 'this year's spending overrun is likely to carry into next year' and that this needs to be accounted for by the Government to avoid budgetary overruns. 'If this is not acknowledged before Budget Day, further spending overruns next year are almost inevitable,' the report said. The IFAC wrote bluntly that 'this all points to poor planning and budgeting'. The body also criticised the Government for being too 'short-term' in its economic outlook. 'The Government has yet to outline a fiscal framework. It has not set a limit for what it sees as a sustainable pace of net spending growth,' the report stated. The spending watchdog called on the Government to publish a medium-term fiscal-structural plan, which it committed to doing alongside the SES in the Programme for Government.
Irish Times
2 days ago
- Business
- Irish Times
Government's spending overruns amount to ‘poor planning', Fiscal Council says
The Irish Fiscal Advisory Council (IFAC) has said the Government's ongoing spending overruns amount to 'poor planning and budgeting'. It follows the Summer Economic Statement (SES), published on Tuesday, showing that planned expenditure for this year is now expected to amount to €108.7 billion, €3.3 billion more than set out in Budget 2025. Some €90.5 billion was allocated in the budget to current expenditure, or the cost of delivering public services, and €14.9 billion to capital expenditure. Both lines have since increased. 'Based on spending data for the first six months of the year, this upward revision is likely to be insufficient,' IFAC said in one of a series of posts it made on X on Wednesday afternoon on the Summer Economic Statement. [ Tax and spending package of €9.4bn to form basis of Budget 2026 Opens in new window ] 'Analysis by the Council suggests current spending is likely to be around current spending is likely to be around €1 billion higher than the SES figures.' IFAC chairman Seamus Coffey confirmed the posts when contacted by The Irish Times. While gross voted spending is now officially forecast to rise by €7.9 billion next year, IFAC said that spending overruns in 2026 are 'almost inevitable'. Some €2 billion of the increase is being provided for capital expenditure under the Government's revised National Development Plan. The Government is allowing for scope for €1.5 billion of tax cuts in Budget 2026, which, IFAC notes, is the equivalent of linking the system to inflation. [ What did the summer economic statement really tell us about Budget 2026? Opens in new window ] 'Excluding windfall corporation tax receipts, the Government is forecasting a budget deficit of almost €11 billion next year,' the watchdog said, nothing that this equates to 3.2 per cent of gross national income-star (GNI*), a measure of the domestic economy. 'This is despite a strong economy.' IFAC also took aim at how the Government warned that if there is a deterioration in the international tariffs landscape, the 2026 budget package would be smaller. 'This is exactly the opposite of standard economic advice. Countercyclical policy means giving more support when the economy is weak and less when it is strong,' it said. The EU is currently in trade talks with the US in an effort to avert US president Donald Trump's threatened 30 per cent charge on most European imports kicking in from August 1st. The EU has threatened to impose nearly €100 billion worth of retaliatory tariffs on US imports ranging from bourbon whiskey to Boeing aircraft in one fell swoop if an accord isn't reached by the deadline. 'More generally, the Government's budgetary plans are focused on the short term,' IFAC said, noting that the Government has yet to live up to its own programme commitment to publish a medium-term fiscal structural plan.
Yahoo
19-06-2025
- Business
- Yahoo
IFAC, Edinburgh Group launch tool to support SMEs
The International Federation of Accountants (IFAC) has launched an online tool to assist small- and medium-sized enterprises (SMEs) in integrating sustainability into their operations. IFAC launched this tool in partnership with the Edinburgh Group, a coalition of 16 accountancy bodies representing more than 1.3 million professional accountants worldwide. The Small Business Sustainability Checklist is an interactive resource developed for IFAC and EG members to share with their own members. It offers practical steps to enhance sustainability practices and future-proof businesses. The tool allows businesses to tailor it based on their industry sector, lifecycle, and products and services, according to IFAC's statement. It uses a simple self-assessment approach to score users' sustainability initiatives across environmental factors, social responsibility, and governance. The checklist also helps users identify risks and opportunities, which can inform a roadmap for improvement. IFAC CEO Lee White said: 'This checklist is a practical tool to help small businesses benchmark and track their sustainability efforts, providing the resources and guidance to help them take the first step or make progress from what they're currently doing.' With shifting global sustainability regulations, the tool arrives at a critical time for small and medium-sized practices aiming to support clients in managing sustainability risks and opportunities. 'This is all about building sustainable futures for both accounting practices and their clients, to face the global standards of today and tomorrow,' White added. The tool includes interactive videos with peer-led content, offering real-world examples from industry professionals. These insights share practical strategies and best practices to help accountants apply sustainability concepts to their firms and clients. Edinburgh Group chair Rajendra Kumar said: 'As a coalition of 16 accountancy bodies from across the world that is focused on supporting small- and medium-sized practices and entities, the Edinburgh Group expects this new tool will be hugely beneficial to those who use it.' "IFAC, Edinburgh Group launch tool to support SMEs" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
The Journal
16-06-2025
- Business
- The Journal
The Irish Congress of Trade Unions wants the government to move away from corporation tax
THE IRISH CONGRESS of Trade Unions has called on the Government to end the 'over-dependence' on corporation tax receipts ahead of the today's National Economic Dialogue. The National Economic Dialogue is taking place at Dublin Castle this morning. The congress (ICTU), which represents over 800,000 workers across Ireland, said that the country's current economic model is 'unsustainable' and called on the Government to use Budget 2026 to put the economy on a 'firmer footing'. Last week, the Irish Fiscal Advisory Council echoed similar sentiments. Launching its Fiscal Assessment Report, the Council's chair warned of the current volatility of Ireland's longtime reliance on corporation tax as uncertainty arises from mooted tariffs from the US and further trade tensions. The ICTU urged Cabinet to build a new economic model that can deliver 'good jobs, improved living standards, and sustained growth'. Advertisement Its General Secretary Owen Reidy said that the government needs to end its reliance on the 'sugar rush' of corporation tax windfalls and start serious planning for the longer term. Corporation tax is likely to be higher than forecast over the rest of the year, IFAC's latest report found. This has been put down to BEPS reforms that mean groups with a turnover of over €750m will pay a 15% minimum rate of tax in every jurisdiction in which they operate. However, there is further uncertainty regarding the future of multinationals in Ireland. The IFAC has been unable to construct a medium-term forecast due to the department's failure to turn over spending profiles, as well as the government's refusal to commit to a fiscal rule, its chair Seamus Coffey told reporters last week. He said that this highlights that there is no medium-term plan or strategy apparent. Reidy today said that Ireland is facing 'significant wage inequality' alongside 'major infrastructure deficits'. 'Budget 2026 must mark a turning point by giving certainty and security to workers across Ireland. That means good jobs that pay well, a decent standard of living, as well as stronger public services. But it should also mean a shift in our economic model. 'In the coming weeks, the Irish Congress of Trade Unions will be setting out how we believe that can be achieved through a New Economic Model, and today at the National Economic Dialogue we will be bringing that message to Ministers,' he said. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
