Government Ministers disclosed on Tuesday that the impending budget is set to include a substantial financial package focused on tax and spending, totalling €8.3 billion. This was announced following the release of the Summer Economic Statement (SES).
Scheduled to be unveiled a week early, on the 1st of October, Budget 2025 is poised to feature increased public expenditure of €6.9 billion, along with taxation steps summing to €1.4 billion. This increase in spending equates to a yearly increase of nearly 7 per cent, a notable surge above the Coalition’s 5 per cent spending clause. The rule aids in maintaining fundamental spending below a 5 per cent cap, deemed conducive for the mid-term.
However, the Central Bank, along with the Irish Fiscal Advisory Council, issued warnings that a vast budget package might overly stimulate an already burgeoning economy. The Department of Finance released statements noting that the Coalition’s spending methodology was being modified to accommodate increased capital spending and provision of more public services set against the background of a bigger population than expected.
This additional money reserved for expenditure in the upcoming budget, the last prior to the general election, follows the promising exchequer returns data revealed last week. The data showed tax income incrementing by nearly €4 billion, a 9 per cent rise compared to the previous year.
The SES—approved by the Cabinet earlier on Tuesday—established the financial boundaries for the forthcoming October budget. As per this strategy presented in the statement, budget day will see €1.4 billion reserved for taxation measures, which is higher than what was previously indicated. The majority of this sum will be channelled towards adjusting tax bands and thresholds to offset inflationary impacts.
Further to this, the government also confirmed an extra funding allocation of €1.5 billion to the health service for this year to cater to improving healthcare quality, complexities of health service provision, and the long-term repercussion of the post-pandemic inflationary environment. The most recent exchequer data, as of the end of June, showed health spending had already exceeded the budget by €1.1 billion.