Summer Economic Statement may increase core spending by 6.1%
The Ministers for Finance and Public Expenditure and Reform Michael McGrath and Paschal Donohoe are expected to publish their Summer Economic Statement today.
This document sets out the parameters for spending and tax cuts in the upcoming Budget.
The surplus in the public finances this year is forecast to reach €10 billion, thanks mainly to bumper windfall receipts of corporation tax.
This means the ministers for Finance and Public Expenditure face big expectations over what October’s Budget will deliver in public expenditure and tax cuts.
They also face calls to rein in those same expectations over fears higher spending could reignite inflation.
The Summer Economic Statement was discussed by party leaders last night and will go before Cabinet today.
It is understood the Statement will sketch out a Budget package of €6.4 billion in new spending, which would include a tax package worth €1.1 billion. That would imply an increase in core spending of 6.1%.
That is higher than the Government’s 5% spending rule but slightly lower than the increases in last year’s Budget.
Finance Minister Michael McGrath said that in framing the Summer Economic Statement, the Government “had to strike a delicate balance between ensuring that we provide enough support for our society for our economy, while at the same time not adding to inflationary pressures and recognizing that it is an economy that is now pretty much at full employment.”
He said there are capacity constraints.
“Striking that right balance has been a challenge, but I’m confident that we have now arrived at an appropriate budgetary package for Ireland which ensures that essentially windfall revenues that we are currently collecting can be protected. “
He said in the coming weeks he plans to bring a further memo to Government seeking agreement on the overall architecture of setting up a long term savings fund, a public investment fund, and also making provision to ensure the country’s national debt becomes more sustainable.