Tánaiste Simon Harris has said the Irish economy is “in a position of relative strength” following warnings from a watchdog that the Government is “budgeting like there’s no tomorrow,” reports Breaking News.
The Irish Fiscal Advisory Council (Ifac) cautioned that long-term planning is insufficient and the Government is not setting aside enough corporation tax windfalls to prepare for future fiscal pressures, reports Breaking News.
In its latest fiscal assessment, Ifac again highlighted challenges posed by an ageing population, climate change, and Ireland’s public finances being heavily dependent on corporation tax from a small number of large US multinationals.
It said that, when “excess” corporation tax is excluded, a deficit of nearly €14 billion is expected next year and that supporting an ageing population while addressing climate change would cost 6 per cent of national income by 2050, equivalent to about €20 billion today, reports Breaking News.
Ifac said now is the time to prepare for these issues while the economy remains strong.
It noted that Budget 2026 lacked budgetary forecasts beyond next year, no rule or guidance for fiscal policy had been set, and a promised updated medium-term fiscal plan had not been submitted to the European Commission, reports Breaking News.
Asked about Ifac’s criticisms on his way into Cabinet, Mr Harris said he intends to submit a medium-term economic plan by the end of the year.
He also agreed with Ifac’s recommendation for a multi-annual budgetary plan, calling it a “sensible suggestion,” reports Breaking News.
He revealed that he requested a meeting with Ifac last week, shortly after becoming finance minister, citing his awareness of “the danger of group think” in Ireland previously.
“My number one immediate priority as our country’s new minister for finance is to produce, with government colleagues, a medium-term economic plan to move beyond the temptation for short-termism and to anchor both our spending and taxation plans for the years ahead in this medium-term framework,” reports Breaking News.
“I intend to have that work completed with government colleagues, with the Taoiseach, with Minister (for Public Expenditure Jack) Chambers, by the end of this year,” reports Breaking News.
He said that while the Irish economy remains “in a position of relative strength,” there is “huge” global uncertainty and now is not the time for complacency,
Mr Harris added: “What I want to see as minister is an end to this drift spending, where in year there’s additional spending. Not every problem can be monetised, sometimes people just actually have to look at ways of reforming, ways of better delivering services,” reports Breaking News. .
“We’re increasing budgets, we’re expanding budgets, but people, agencies, departments, now need to live within those budgets, and we need to get back to that annual cycle of budgeting, grounded and anchored in a new medium-term plan that will be produced by the end of the year. I think that is a safe, prudent and sensible measure to take to keep our country and our economy secure in these turbulent times,” reports Breaking News. .
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