The Irish Government’s official fiscal watchdog has said the State is planning a €9.4 billion rise in expenditure for Budget 2026, a move it described as “not appropriate” given the strength of the economy.
The Irish Fiscal Advisory Council (IFAC), the independent body created after the financial crash to oversee public finances, argued that “a more restrained approach would help avoid overheating the economy and leave room to respond to future downturns.”
“Large spending overruns are continuing this year,” IFAC wrote.
“Last October, the Government budgeted for a €3 billion increase in spending. In practice, spending is likely to rise by €7.6 billion. These overruns need to be incorporated into Budget 2026 forecasts.
“Given that the economy is performing well, this is not a time for a large budget package. Budgetary policy is already providing significant support. After excluding excess corporation tax receipts, the government is spending more than collects in underlying revenue.”
They added: “The Government needs to commit to a clear guide or rule for budgetary policy. The Government is yet to set any limit on what is sustainable for the public finances.
“The Government should publish a revised medium-term fiscal plan alongside the budget. This had previously been promised for during the summer. If this plan is based on realistic forecasts, then it can help shift Ireland away from year-to-year budgeting.”
It noted that tariffs introduced by the Trump administration have injected uncertainty into the global outlook, though their impact on Ireland has not yet been significant.
The watchdog also warned that spending so far in 2025 is running far beyond what was initially set out. While the Government had budgeted for a €3 billion rise this year, the outturn is on course to reach €7.6 billion.
“This repeats the pattern of spending overruns in recent years,” the council said.
Departments including Education, Children and Justice have already seen budgets increase by 7.5%, despite plans for a rise of just 2.5%.
IFAC added that the State is relying heavily on windfall tax receipts from multinationals to finance additional commitments.
It said that excluding those volatile receipts, spending is running €8 billion higher than the Government is collecting in revenues.
Despite its criticisms, IFAC acknowledged that the economy remains in strong health, with record employment and firm consumer spending.