Overruns in day-to-day Government spending are likely to exceed €1.4 billion this year, the Irish Fiscal Advisory Council (Ifac) is to tell the Oireachtas Committee on Budgetary Oversight.
It will also warn that large increases in Government spending or big tax cuts in the upcoming budget will result in “permanently higher costs” for households and businesses.
“Spending overruns have become routine and have repeatedly pushed spending above budget-day plans,” Ifac chairman Seamus Coffey is to say in his opening address on Wednesday.
“Over the past decade, spending overruns have averaged more than €2 billion per year in today’s terms.”
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He says the last time spending was at, or below, budgeted levels was in 2013.
Coffey also warns that the Government’s day-to-day spending is growing at a fast pace this year, by 8 per cent to date, rather than the 6.3 per cent growth that was signalled. The Government has already revised up spending forecasts for this year by €700 million.
“This continues a pattern of fast spending growth in recent years,” he says, also saying a further €1.4 billion of overruns are likely this year.
[ Ifac takes aim at Government’s Alice in Wonderland budgetingOpens in new window ]
The total is bigger than Ifac has previously forecast.
The acceleration in spending this year is due to education overruns, which were already apparent last year, and energy supports that were introduced this year.
But overruns are also emerging in other areas such as health, social protection, foreign affairs and housing.
The rapid rise in public spending – it jumped by 54 per cent between 2019 and 2025 – has become a flashpoint for the Government.
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Minister for Public Expenditure Jack Chambers has promised a “fundamental change” in budgeting and has warned departments they will face greater sanctions for breaching their spending allocations.
The Government’s new medium-term fiscal and structural plan pledges to limit the annual increase in public spending to 6 per cent a year for the next five budgets.
Concerning the upcoming budget, Coffey in his opening address warns the Government that a big spending package will only rebound on consumers in the form of higher prices in the future.
“Given the economy is in such a strong position, large increases in Government spending and tax cuts could add further to inflation,” he says.
His comments coincide with the latest Central Bank of Ireland quarterly bulletin, which upgraded the growth outlook for the Irish economy on the back of stronger-than-expected consumer spending.
“The Government set out its broad budget plans in the summer economic statement. Taking these plans at face value, they imply a net spending growth rate of 6 per cent,” Coffey says.
“The council’s advice is that spending (net of tax policy changes) should grow no faster than the sustainable growth rate of the economy. In nominal terms, the Irish economy’s sustainable growth rate is estimated at 4.5–5 per cent.”
