Government spending is “outpacing” revenue, leading to a “deterioration” in the State’s financial position, the Irish Fiscal Advisory Council (Ifac) has warned.
The budgetary watchdog predicted that over-runs in day-to-day spending would top €2.5 billion this year.
It noted that current spending will be €2.55 billion more than what the Government flagged in last year’s budget and €1.1 billion higher than what the Government predicted in last month’s budget.
Ifac said the over-run was more broad-based than in previous years with spending across education, children and justice already up by 7.5 per cent against a targeted increase of 2.5 per cent.
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Health spending, a perennial problem for the Government, has also been rising faster than planned, up 5.8 per cent relative to a planned Budget 2025 growth rate of 4.1 per cent.
In response to the latest exchequer returns, indicating gross voted expenditure rose by almost 8 per cent to €87.1 billion in the first 10 months of 2025, Ifac said spending growth was “outpacing the growth in revenue”.
“This is leading to a deterioration in the headline and underlying balance,” it said.
The council noted underlying revenue in 2025 has grown faster than forecast in Budget 2025.
“This faster growth is seen across the key tax headings, with the exception of VAT, which is below forecast,” it said.
However, it warned that corporation tax, which has amassed €21.1 billion so far this year, continues to be “volatile”.
The latest exchequer figures come in the wake of warnings that Ireland’s current corporate tax windfall could peel away after 2030 as big pharma and big tech pledge to invest more in the US economy and less in Europe.
The Department of Finance’s Future Forty report, published this week, warned about the Government’s overreliance on these revenues while highlighting a fall-off in receipts could lead to a significant decline in exchequer revenue over the next four decades.
