Government spending last year was almost €4 billion higher than what had been set out in Budget 2025, the Irish Fiscal Advisory Council (Ifac) has warned.
Responding to the latest year-end exchequer returns, which showed Government spending hit a record €109 billion last year with spending overruns across several departments, the budgetary watchdog said spending was “increasing at a fast pace, leading to large overruns”.
Current spending overran its original budget by €2.3 billion, while capital spending was €1.6 billion higher than forecast, the council noted.
It also highlighted that the 2025 “overruns” were spread across most Government departments, and not just health, which often struggles to work within its budget.
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The council has been highly critical of the Government’s failure to adhere to its own spending plans. In November, Ifac chairman Seamus Coffey warned the Coalition was “budgeting like there’s no tomorrow”.
In its reaction to the latest exchequer numbers, it noted that current spending in 2025 was €900 million higher than projected in Budget 2026 just three months ago.
“This was not factored into forecasts for 2026. Contingencies of only €400 million remain for 2026. As a result, overruns are likely to be repeated in 2026,” it said.
Minister for Public Expenditure, Jack Chambers defended the hike in spending last year, insisting “the uplift ... delivered on the key areas of importance we set out in Budget 2025: targeted investment in public services and infrastructure”.
The Government’s Medium Term Fiscal and Structural Plan, published last month, which pledges to keep the annual increase in net spending over the next five years to 6 per cent is, however, seen as an acknowledgment that spending has got out of control.
The latest exchequer returns indicated the Government collected a record €106 billion in tax receipts last year.
The strong performance was driven by windfall corporate taxes, which rose by 17 per cent to €32.9 billion.
The Government has been repeatedly warned about its creeping reliance on corporation tax and how an external shock to the multinational sector could have “serious repercussions” for the public finances.
Ireland’s exposure to Trump’s protectionist pivot has been flagged as a serious risk to the economy. But the two pillars of Ireland’s export economy and the two drivers of the State’s windfall taxes – pharma and big tech – have so far remained outside Trump’s tariff dragnet, insulating the economy from much of the current global volatility.
“While Ireland is exposed to downside risks from revenues concentrated among a small number of large multinationals, the surge in output and activity in the pharma sector in 2025 ahead of expected US tariffs and continued robust performance of the tech sector could drive higher-than-expected CT [corporation tax] revenues in the short run,” AIB’s chief economist, David McNamara said.
Brendan Murphy, tax partner at Baker Tilly Ireland, said: “When you exclude Apple case payments from 2024 and 2025 results, corporation tax receipts finally broke the €30 billion mark for the calendar year 2025.”
“It was just shy of this target in 2024 when you omit the €11 billion one off Apple payment from the €40 billion collected,” he said. “This demonstrates the continued resilience of Irish businesses in the face of global uncertainty and sets us up well heading into 2025.”
