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Irish Times
7 hours 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.
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
RTÉ News
10-06-2025
- Business
- RTÉ News
'Poor budgeting' - Government spending rising faster than expected, warns IFAC
The State's independent financial watchdog has warned that Government spending was rising much faster than planned. The Irish Fiscal Advisory Council said "poor budgeting" was mostly to blame. It said current spending is up 6% so far this year, which was well above the 1.4% outlined in the Budget. It added: "This is because earlier overruns weren't properly built into the latest forecasts." It said while the Government is running a surplus, if excess corporation tax receipts and recent economic buoyancy were stripped out, there was a structural deficit equivalent to €2,500 per worker. It also called for the Government to set spending ceilings for each Department as it was legally required to do. The council was critical of the Government for not setting out any clear plans for a domestic spending rule - which would outline a limit for spending increases. It said: "With forecasts covering only the next 20 months, Ireland still lacks a proper medium-term fiscal strategy." It has also called for the Government to use budgetary policy to reduce the ups and downs of the economic cycle. It said: "This means showing restraint when the economy is strong. It also means providing support when the economy is struggling." IFAC Chairman Seamus Coffey said: "The Irish economy is in a strong position going into a period of uncertainty." The council has also predicted that the revenue from corporation tax is likely to increase in the short term. It said this was due to corporation tax going up for large companies from 12.5% to 15%. It added that it would also rise as pharmaceutical companies had been excluded from US tariffs so far and exports from drug companies had recently risen significantly.
RTÉ News
09-06-2025
- Business
- RTÉ News
'Poor budgeting' - Government spending rising faster than expected
The State's independent financial watchdog has warned that Government spending was rising much faster than planned. The Irish Fiscal Advisory Council said "poor budgeting" was mostly to blame. It said current spending is up 6% so far this year, which was well above the 1.4% outlined in the Budget. It added: "This is because earlier overruns weren't properly built into the latest forecasts." It said while the Government is running a surplus, if excess corporation tax receipts and recent economic buoyancy were stripped out, there was a structural deficit equivalent to €2,500 per worker. It also called for the Government to set spending ceilings for each Department as it was legally required to do. The council was critical of the Government for not setting out any clear plans for a domestic spending rule - which would outline a limit for spending increases. It said: "With forecasts covering only the next 20 months, Ireland still lacks a proper medium-term fiscal strategy." It has also called for the Government to use budgetary policy to reduce the ups and downs of the economic cycle. It said: "This means showing restraint when the economy is strong. It also means providing support when the economy is struggling." Irish Fiscal Advisory Council chairman Seamus Coffey chairman said: "The Irish economy is in a strong position going into a period of uncertainty." The council has also predicted that the revenue from corporation tax is likely to increase in the short term. It said this was due to corporation tax going up for large companies from 12.5% to 15%. It added that it would also rise as pharmaceutical companies had been excluded from US tariffs so far and exports from drug companies had recently risen significantly.
Euronews
04-03-2025
- Business
- Euronews
Missing EU climate targets could leave Ireland facing a €26 billion bill
Ireland could face a 'staggering' bill of between €8 billion and €26 billion to other EU member states if it doesn't act now to reduce emissions. This stark warning about the cost of missing its goals comes via a joint report from the Irish Fiscal Advisory Council (IFAC) and Climate Change Advisory Council (CCAC). It says the country's government needs to 'act now' or it could be in line to pay significant compliance costs further down the line. Plans to cut emissions that have yet to be enacted could reduce the potential costs by between €3 billion to €12 billion. Why does Ireland have to pay for missing emissions targets? The EU's Effort Sharing Regulation sets binding national targets for reducing greenhouse gas emissions. Member states have to meet climate targets for five key sectors: road transport, buildings, small industry, waste, and agriculture. Each goal is adjusted based on a country's GDP, with wealthier nations having stricter requirements. Countries that underperform will have to buy 'emissions allocations' – essentially carbon credits – from those that are overperforming in order to bridge the gap. But the price of these allocations depends on the extent to which other EU member states achieve or overachieve on their targets. A report from Transport & Environment (T&E) last year warned that, with so many countries set to miss their goals, the scarcity of allocations could lead to a bidding war in 2030. This makes the price of each credit challenging to predict, leading to the massive variation in the predicted cost. 'Ireland can take actions now to offset potential costs down the line,' explains Seamus Coffey, chair of the IFAC, adding that it can do so in a way that 'doesn't threaten the wider sustainability of public finances'. In the past four years, the report also notes that Ireland has missed out on around €500 million in revenue from carbon credits it is entitled to sell. Two other pieces of national legislation on land use and forestry and the share of energy from renewable sources could also pose smaller yet significant costs. How far is Ireland from meeting its emissions targets? The latest data from the country's Environmental Protection Agency projects that Ireland will reduce its greenhouse gas emissions by 29 per cent by 2030. That is a long way off of its agreed target to cut emissions by 51 per cent by 2030. While we have made some progress in reducing emissions, our pace of change is not enough to meet our national and EU climate targets. Marie Donnelly Chair of the Climate Change Advisory Council It isn't alone, however, with just Luxembourg, Greece, Portugal, Spain and Slovenia overachieving on emissions cuts. Though many other EU member states are also on track to miss targets agreed under the Effort Sharing Regulation, Ireland is among the worst. The country had the highest emissions gap per capita of any EU state at 8.7 tonnes of CO2 per person. This leaves it as one of the least likely to meet its 2030 emissions reduction target under current climate policies. 'While we have made some progress in reducing emissions, our pace of change is not enough to meet our national and EU climate targets,' says Marie Donnelly, chair of the CCAC. Can Ireland cut its greenhouse gas emissions in time? If Ireland's government implements its 'more ambitious' Climate Action Plan by 2030, this course of action could reduce costs by between €3 billion and €12 billion. But, the report warns, this plan is not being delivered at the 'scale of the speed required' and urges officials to 'act now or risk substantial costs later'. Around a tenth of the country's planned capital spending to 2030 could be enough, it says. This would cover the cost of upgrading Ireland's electricity grid, reducing the cost of 700,000 new electric vehicles to less than €15,000, improving EV charging infrastructure, and supporting forestry initiatives and the rewetting of the country's wetlands. Not doing so would be a massive missed opportunity to cut emissions, the report's authors say. 'The government must take clear and decisive action now to transition to a climate neutral economy,' Donnelly explains. 'It is better to make the investments into Irish households, communities and businesses now, rather than paying significant compliance costs in the years ahead.' Taoiseach, Micheál Martin, has defended the government's emissions progress to the Irish press, saying the country has made 'very significant progress' over the last four years, adding that emissions have come down in the last 12 months. While Martin admitted to not having read the report in its entirety, he pointed to a 'big wave' of upcoming spending on the electricity grid and an upcoming push for offshore wind. He also added that the government was 'determined' to continue progressing on climate.
