Fiscal Watchdog Warns of Unsustainable Surge in Irish Government Spending

Dublin: The Irish Fiscal Advisory Council has raised serious concerns over the rapid increase in government spending, warning that Ireland’s fiscal position could become unsustainable if current trends continue.

Addressing the Oireachtas Budgetary Oversight Committee, Council Chairman Seamus Coffey said Ireland’s planned spending growth over the next five years is faster than that of any other EU member state and is projected to be more than double the EU average. He noted that since 2019, Ireland has recorded the highest level of government spending growth in Europe.

Coffey cautioned that if current spending patterns persist, the state is likely to face a budget deficit from 2028. He stressed the need for greater restraint, warning that for every €8 collected in corporation tax, at least €1 should be set aside to protect the public finances. Instead, he said, spending continues to rise well above budgeted levels.

Government expenditure in 2025 is currently €3.9 billion higher than originally planned, Coffey told the committee, adding that continued overruns could lead to fiscal pressures becoming “out of hand”.

The council also highlighted future risks to tax revenues, particularly from the transition to electric vehicles. As motorists move away from petrol and diesel, revenue from excise duties, VAT and carbon tax on fossil fuels will decline, creating a potential gap in state finances unless alternative revenue sources are identified.

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