• Published date: 12 April 2024
• Publication title: Irish Times (Dublin, Ireland)

But as the legislation wends its way through the Oireachtas, the penny will start to drop on the Government benches. Some €6 billion is being effectively taken off the table for October’s budget and saved for the future

And that is going to leave less for spending rises and tax cuts in what – if the Government lasts that long – will be the last budget day before the general election.

On the forecasts made in the last budget in October 2023, the Government will still have enough room for a generous budget, even allowing for the €6 billion being put aside into the two funds next year. The budget predictions were for a general government surplus of more than €14 billion in both 2025 and 2026.

This leaves plenty of leeway, though not as much as the headline figure suggests, because the European Union (EU) borrowing measure does not count in the money being put into the funds, as it is moving from one part of the State coffers to another.

However, putting money into the funds reduces the amount of cash available to the exchequer and thus the room for budget measures.

These forecasts will be revised in the Department of Finance Stability Programme Update, due to be published shortly, when the point about the reduced room for budget measures – and the ongoing uncertainty about corporation tax – are both likely to be underlined.

A significant part of the budget leeway in the years ahead will go towards putting cash into the two funds. But the forecast for the cumulative surpluses over the next few years will be significant.

In last year’s update, the forecast for the 2023-2026 period was for a total surplus of €65 billion, and there appears no reason to expect that the 2024-2027 period to be included in the new update will be any less than this.

So what about Budget 2025? Counting in all permanent and temporary measures, Budget 2024 delivered cost the exchequer €14 billion, but it is clear that there will not be the leeway to do something on that scale this October. The Stability Programme Update will have an updated official estimate of what might be available.

This leads to one awkward political question: are the temporary measures announced to support living standards during the cost of-living crisis to be repeated? Or, with the rate of inflation falling, but prices still high, will the Government try to phase out giveaways such as the energy credit?

Remember that much of the leeway will be used up by the annual pressure to spend more in areas such as health –...