DUBLIN – Ireland’s independent fiscal watchdog, the Irish Fiscal Advisory Council (IFAC), has issued a stern warning to the Government, urging it to adopt a more restrained approach to spending in the upcoming Budget 2026. The Council’s latest pre-budget statement highlights that the government’s current plans risk overheating the economy and leave the country vulnerable to future economic downturns.
In a candid assessment, the IFAC stated that a planned total spending increase of €9.4 billion for Budget 2026 is “not appropriate” given the economy’s strong performance. This comes on the heels of significant spending overruns in 2025, a pattern the Council says “repeats the pattern of spending overruns in recent years.” The government had originally proposed a €3 billion spending increase for 2025, but actual expenditure is now projected to rise by an estimated €7.6 billion.
The overruns are broad-based, with departments such as Education, Children, and Justice seeing spending grow by 7.5%, well beyond the budgeted 2.5% increase.
Reliance on Corporate Windfalls
A core concern raised by the IFAC is the government’s increasing reliance on volatile windfall corporation tax receipts from multinational companies to finance additional spending. The Council notes that if these receipts are excluded, the government is currently spending €8 billion more than it is collecting in revenues. This reliance, according to IFAC Chairman Seamus Coffey, represents a serious risk to the country’s fiscal stability.
“The Irish economy is in a strong position, despite high uncertainty,” said Coffey. “As a result, this is not a time for a large budgetary package. That should be reserved for periods where the economy is weak and needs support.”
The Council’s criticism extends to the lack of a clear long-term strategy. It points out that the Government has not yet published a medium-term fiscal plan, a document that was promised for release this summer, and that Ireland still lacks a clear spending rule to limit the annual increase in expenditure.
Economic Outlook and Future Risks
Despite the fiscal warnings, the IFAC acknowledges that the Irish economy continues to perform well, with record employment and robust consumer spending. However, it cautions that without a more disciplined budgetary policy, the country risks “flying blind.” The Council also noted the ongoing uncertainty created by potential tariffs imposed by the Trump administration, which could pose a risk to the economy.
In a related development, the Irish Congress of Trade Unions (ICTU) has also weighed in on the Budget 2026 debate, echoing the IFAC’s concerns about relying on corporate tax windfalls. In its pre-budget submission, the ICTU urged the government to place the economy on a “firmer footing” by investing in infrastructure and innovation while reducing child poverty and improving public services.
