Budget 2024: Ireland risks repeating mistakes of past in plans to breach spending rules, watchdog warns

• Published date: 06 September 2023
• Publication title: Irish Times: Web Edition Articles (Dublin, Ireland)

In a pre-budget submission the Irish Fiscal Advisory Council (Ifac), an independent statutory body set up to scrutinise the Government's fiscal plans and forecasts, also said renewing temporary measures such as the Business Energy Support Scheme when energy prices are beginning to taper off risked adding to price pressures

Speaking to reporters on Tuesday, acting Ifac chairman Prof Michael McMahon said the Republic's economy "does not require additional stimulus through a large budgetary package". The labour market was "now beyond full employment", with vacancy rates particularly high in some sectors such as construction, and further stimulus risked adding to the price and capacity pressures already being experienced.

He said there was ample "scope" within the parameters of the spending rule, which sets out to limit the overall increase in spending to 5 per cent annually, for "transfers" and "redistribution" from some sectors of the economy to fund additional spending in others.

Mr McMahon also said there was "reason to be concerned" about the manner in which the Government's spending plans were revised between April and July. "Such concerns weaken the credibility of Government projections," he said. "They lack transparency, and still don't factor in overruns and costs related to population ageing and climate transition."

Ifac, which can refuse to endorse the Government's budgetary forecasts, has previously criticised the Coalition's plans to breach the spending rule. Mr McMahon said "there is a big red button where we don't endorse, but I think the bar for doing that should be relatively high". However, he said the council would be more likely to "wield big sticks" in circumstances "where, as we see now, that violation is going to be...