Budget will not risk overheating economy, ministers say

The two Government ministers in charge of the budget have rejected criticism from the Irish Fiscal Advisory Council (IFAC) over Budget 2025, and said ministers are not risking overheating the economy.

In a statement responding to the Summer Economic Statement, IFAC said there was an “everything now” approach to the budget plans and urged caution.

IFAC also criticised the decision to breach the 5% spending increase rule, adding that it could risk increasing inflation.

Minister for Finance Jack Chambers said the Summer Economic Statement showed a “balanced approach” to spending, and that issues in health and other areas meant that adhering to the 5% rule would be “a risk” for public services.

He said the Government “obviously wants to fulfil the public pay deals”.

“IFAC has a perspective, but we have to take into account the wider public service” and that it “isn’t a case of Government wanting to do everything in 2025”, said Mr Chambers.

Minister for Public Expenditure Paschal Donohoe said if the Government did not outline a spending plan it would be accused of “not spending enough”.

He said the Government was “choosing not to spend €6 billion” for a rainy day fund and that this was “the greatest proof Government is not doing everything all at once”.

Mr Donohoe said the 5% spending rule was implemented during the pandemic in a time of crisis and to reduce “the economic shock”.

Mr Chambers also said the cost-of-living section of Budget 2025 “may not be on the same scale” as previous years and that “it may not be appropriate” to do so.

He said this will be decided “closer to the time” but that he was aware many people “still need support”.