IFAC Criticises Ireland’s Economic Policy, Warns of Rising Spending and Weak Fiscal Planning

Dublin: The Irish Fiscal Advisory Committee (IFAC) has issued a sharp rebuke of the government’s fiscal strategy, warning that current economic policies reflect a “no-tomorrow” approach. Despite strong tax inflows from US multinationals, the committee highlighted declining windfall revenues and a lack of long-term financial planning.

Concerns Over Windfall Tax Reliance

IFAC noted that although corporation tax from US multinationals continues to boost the exchequer, the government’s dependence on this unstable revenue stream poses significant risks. The committee warned that the share of corporation tax allocated to savings will drop from 32% in 2024 to 15% by 2026.

The committee also criticised the government for having no fiscal projections beyond 2026 and for failing to submit a revised interim financial plan to the European Commission—a legal requirement under EU rules.

Rapid Spending Growth and Rising Deficit

According to IFAC, government spending is set to rise by 11% this year, far outpacing tax revenue growth. This trend, the committee said, will lead to an underlying deficit of €7 billion in 2024.

Spending limits announced in previous budgets are no longer being met. The 2024 expenditure target of €96.6 billion has already been exceeded, with 2025 spending projected to be €12.5 billion higher. Expenditure growth, originally forecast at 5.1% for 2024 and 6.5% for 2025, has now escalated to 8.6% and 7.7%, respectively.

Council Chair Seamus Coffey accused the government of poor fiscal management, stating that none of its financial projections are reliable. He pointed out that, even in November, the government lacked accurate figures for 2025 and had little clarity on spending for 2026 and 2027.

Coffey criticised the government’s justification for failing to submit the interim economic plan to the EU Commission, noting that most EU countries have already fulfilled this obligation.

Opposition: Budget Has “Become a Myth”

The IFAC findings prompted strong political backlash. Labour leader Ivana Bacik said the committee’s assessment shows the budget has “become a myth” due to the government’s lack of planning beyond the coming year.

Labour TD Mary Sherlock accused Fine Gael of moving “from budget to budget” without strategic direction and called spending in health, housing, and hospitality “fiscally reckless”.

Government Responds

Deputy Prime Minister and Finance Minister Simon Harris said preparing an interim economic plan is his top priority and pledged to complete it by year-end. He welcomed IFAC’s analysis and said it would inform the government’s next steps.

Taoiseach Micheál Martin acknowledged recent high spending levels but said they reflect responses to Covid-19, energy crises, population growth, and tariff pressures. He emphasised that much of future spending will be allocated to capital investment, while criticising the opposition for wanting to “spend like there is no tomorrow.”

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