Economy growth predicted, fiscal council spending warning

Minister for Finance Jack Chambers said that Budget 2025 will put in place the policies and measures to continue the country's positive trajectory and ensure that everyone sees a promising and hopeful future in this country.

Delivering Budget 2025 in the Dáil, Mr Chambers said it will put the country on a firm footing for the future.

However, the Irish Fiscal Advisory Council said that the budget "repeats the mistakes of the past".

Growth in the domestic economy is predicted to pick up next year, according to the minister.

Mr Chambers said the Department of Finance was now projecting 2.5% growth in Modified Domestic Demand this year.

This would rise to almost 3% in 2025, he said.

Employment is also predicted to have risen by almost 110,000 by the end of next year, compared to the numbers employed at the end of 2023.

Unemployment is predicted to stand at approximately 4.5% next year.

The department is also predicting that inflation will continue to ease, and will be below 2% this year and in 2025.

This, Minister Chambers said, would allow for an improvement in real wages, which in turn would help to support consumer spending.

Despite this, he said he was "acutely aware" that many continue to struggle with higher prices.

As a result Budget 2025 would include a cost of living package designed to support "the most vulnerable".

The minister said it was clear that supply was the main constraint on growth in the economy, with investment in infrastructure an imperative.

He also said it was clear that we are now living in a "more shock prone world".

Any future global shocks would have immediate knock-on consequences for the Irish economy, he said, and it was important to strike a balance between supporting families and businesses, while also preparing for future challenges.

Ireland 'needs more serious vision'

The fiscal council, which is the State's independent watchdog, said "Ireland needs a more serious vision that delivers on the economy's needs without repeating the boom-to-bust pattern of the past".

It added the package announced by the Government amounts to €9.1 billion and is "substantial" compared to what would have been seen during Covid-19.

The council said part of the increase in spending relates to overruns in 2024 which amounts to €3.7bn compared to the estimate of spending for this year.

It said: "Only about half of the Government's €2.1 billion of cost-of-living measures were targeted. The universal energy credits, child benefit payments, and extension to VAT cuts on electricity and gas make up €1 billion of this. The same supports could have been provided to those most in need at a much lower cost."

Spending amounted to a net increase of 9.2% for 2024 which was "far higher" than the Government's own 5% spending limit, the council said.

It added the Government is running a surplus driven by strong corporation tax and a healthy economy.

If these were reversed there would be a deficit of €9bn.

It added less than half of the excess corporation tax is being saved.

Additional reporting David Murphy