Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe have overseen enormous increases in State spending that have been enabled by windfall corporate tax receipts. Photograph: Barry Cronin for The Irish Times., the focus was understandably on the headline figures, specifically the €8.6 billion budget surplus expected in 2024. Crucially, the department still judges weak corporate taxes in early 2024 to be a temporary issue rather than a pernicious trend.
The intention is that member states will not be able to alter the path of net expenditure once it has been agreed with the EU council, unless a new Government takes office. This will certainly be a very different vista for the next Irish government.E-gates of hell signal start of travel chaos season As the Department of Finance puts it in the SPU, the new rules will require a careful examination of the macroeconomic environment and a credible path for public expenditure, a “sea change” in how budgetary policy is formulated in Ireland.
In their December assessment of Budget 2024, entitled The Government needs a Serious Fiscal Framework, the Irish Fiscal Advisory Council was unusually trenchant in its criticism, highlighting that the Government is set to repeatedly breach its own 5 per cent rule for expenditure growth and arguing fiscal gimmickry had been employed to flatter the numbers.
The UK’s experience with fiscal planning is also telling. The UK Treasury’s Spending Review sets out departmental allocations for three years, supplemented by the Office for Budgetary Responsibility’s five-year projections. Some Conservatives have seen the OBR’s seemingly arcane and uncertain judgments on productivity growth, investment and labour participation as playing too strong a role in the process, or even anti-democratic.
Source: News Formal (newsformal.com)
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