Government warns ‘deterioration in tariffs' would result in ‘recalibration' of €9.4b budget package
This afternoon, the Government announced funding proposals for the
latest National Development Plan (NDP) – it covers the period up to 2035 and sets out a total investment of €275.4 billion.
The Government also
published the Summer Economic Statement which outlines the parameters for October's Budget.
Finance Minister Paschal Donohoe and Public Expenditure Minister Jack Chambers warned in the Summer Economic Statement (SEC) that the Government is preparing October's budget at a time 'when the global tariff landscape is in a state of flux'.
Last week,
US president Donald Trump said that deal between the US and EU to prevent the implementation of 30% tariffs on European goods exported to America is 'possible'.
A 10% tariff on EU imports has been in place since mid-April.
Negotiators are under renewed pressure to strike a deal after Trump threatened earlier this month that the 30% tariff would be in place for the EU if a new trade agreement was not reached by 1 August.
Tánaiste Simon Harris
told cabinet
that a 30% tariff rate on goods from the EU could accelerate potential job losses in Ireland.
The SEC remarks that the 'global economic backdrop has become increasingly challenging' and that there is 'concrete evidence that the transatlantic economic relationship has taken a step backwards'.
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The SEC outlines that Budget 2026 currently provides for an overall package of €9.4 billion, which will be comprised of both tax reductions and public spending increases.
The tax package will amount to €1.5 billion, while the spending package will be €7.9 billion.
However, the Government remarks in the SEC that should there be a 'deterioration in the tariff landscape, Government will recalibrate its fiscal strategy'.
There would be a reduction in the budgetary package and the Government said this would be required to 'ensure that the public finances remain on a sustainable trajectory'.
The Government added that 'any increase in the scale and/or scope of tariffs could have a potentially large adverse impact on the Irish economy and public finances'.
The Government also warns that a 'tit-for-tat escalation' in tariffs between the EU and US would be 'especially problematic for Ireland'.
It adds that Budget 2026 is designed to 'address the policy challenges of today without jeopardising fiscal sustainability into the future' and that October's Budget will 'focus on investment rather than consumption'.
'It is designed to address the infrastructure gap and to boost economic resilience,' notes the SEC.
Meanwhile, the SEC states that the 'public finances are not as healthy as the headline figures suggest'.
It notes that while the headline budgetary position is in surplus, this is 'almost entirely due to a handful of large corporate taxpayers'.
It also warns that issues such as an aging population and the need to phase out fossil fuels and greenhouse gas emitters will have 'profound implications for the Irish economy and for the public finances'.
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