State must increase spending by €265bn by 2050, Central Bank's Makhlouf warns
Central Bank
governor
Gabriel Makhlouf
has said, as he called for a credible spending rule to help prevent future downturns.
'While the State's Future Ireland Fund (FIF) will go some way to paying for what is needed in the years ahead, 'the FIF will be insufficient – on its own – to fund the higher level of public expenditure that will be required to meet the needs of an older population and to fund climate and housing investment,' Mr Makhlouf wrote in his
pre-budget letter
to Minister for Finance
Paschal Donohoe
, which was published on Monday.
Spending 'will need to rise by 6.5 percentage points of national income (GNI*), or €265 billion, between 2025 and 2050 to fund higher age-related spending and the additional public investment required to meet housing and net zero targets,' he added in the letter, which is considered a key part of the budget planning process.
Amid what he described as 'heightened uncertainty' around the global economy, Mr Makhlouf urged the Government to broaden the tax base, amid concerns about how reliant the exchequer is on a small number of companies and individuals to pay maintain its tax revenue.
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Overseas multinationals generated about a fifth of all tax and PRSI in 2023, Mr Makhlouf said, while about 8.5 per cent of tax payers accounted for 56 per cent of personal income taxes paid.
Given that backdrop, the Government should install a 'credible' spending rule in the upcoming budget.
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Government must 'anchor' spending as Ireland faces potential permanent economic hit from tariffs, official says
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'To avoid a repeat of past mistakes and to shift budgetary policy away from an excessive short-term approach, the Government should commit to a credible fiscal anchor for budgetary policy to ensure the overall fiscal stance is suitable, guards against procyclicality and boom-bust dynamics and safeguards long-run fiscal sustainability,' Mr Makhlouf wrote.
Successive governments have previously pledged to cap the increase in so-called core spending at 5 per cent per year. Yet in the years since that pledge was introduced, successive ministers have broken that rule.
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Mr Makhlouf has been critical of such moves in the past, noting it would likely boost inflation.
'It is important that policy supports rigorous expenditure control – not least of current expenditure – and enables the enforcement of sustainable increases in overall net government expenditure over time,' the governor added.
On housing, the Mr Makhlouf noted that public money on its own 'will not be sufficient to address the housing and wider infrastructure gaps that have emerged. Fiscal and broader public policy should more actively consider reforms to crowd-in private investment and to promote productivity growth.'
He pointed to measures that could quicken the planning process for housing, adding that such measures which would reduce the delays and costs were needed to help ensure the long term benefits of such projects feed into long-term growth.
Mr Makhlouf also pointed to the need for investment in new technologies in the construction sector to help boost large scale projects especially for housing and infrastructure.
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Irish Times
an hour ago
- Irish Times
Letters to the Editor, August 16th: In defence of the Angelus, SUVs, and worshipping Oasis
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All this had led to the secretary of the then department of posts and telegraphs, during the late 1940s, discussing the idea of a daily broadcast spoken Angelus with the Catholic archbishop of Dublin, John Charles McQuaid. Charles Kelly, the director of Radio Éireann, was also consulted, but was not in favour of this proposal. READ MORE However, after further discussion they concluded that 'the introduction of speech would be a mistake and we should experiment further simply with a bell'. Archbishop McQuaid suggested that it would be appropriate to commence on the Feast of the Assumption, August 15th, 1950. And so it was done. We have had it ever since; indeed, it has expanded to include a sound and visual version on RTÉ television. While most of us probably like the comfort of some long-run familiarity in our lives (and, born in 1950, the Angelus has always been with me), on the surface it does seem out of place in Ireland 2025. 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Gaza offensive conclusions Sir, – It is almost impossible to escape the conclusion that from the beginning of its Gaza offensive Israel's objective was not just defensive, but clearly an exercise in ethnic cleansing. This would be achieved through a three-pronged approach; a large scale and indiscriminate military operation, a blockade of food and medical supplies. and the destruction of the Gaza medical infrastructure. This strategy was implemented under the cover of seeking to eliminate Hamas, whom we were told populated a complex tunnel system, thus requiring a carpet aerial campaign of destruction. In addition, we were informed that every medical facility in Gaza housed terrorists and had to be destroyed, while Hamas was supposed to be stealing all the humanitarian aid so this was withheld and the only agency capable of distributing it was banned from doing so. 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Irish Times
4 hours ago
- Irish Times
Irish passengers stranded in Canada due to cabin crew strike
Some 200 Air Canada passengers on a flight to Dublin have been stranded at Toronto airport as a result of an impending strike. More than 10,000 Air Canada flight attendants are due to walk off the job as of 7am Irish time on Saturday. The Canadian Union of Public Employees, which represents cabin crew, rejected Air Canada's latest contract offer as inadequate. Among their demands are that cabin crew be paid for the time they are on the ground preparing for flights. Some 98 per cent of flight attendants have voted for strike action READ MORE Consequently, Air Canada has already cancelled 500 flights due to take off, as the planes and crew may be stranded overseas if and when the strike happens. The dispute is over pay and conditions. Air Canada AC800 flight to Dublin was due to take off at 8.40pm local time in Canada and arrive in Dublin at 8.15am on Saturday. Passengers on the flight were sent a message from the carrier to state that their system had looked for flight options on more than 120 carriers and found nothing available. Passenger Miren McDonald at Pearson Airport in Toronto where a strike by Air Canada crew has brought many flights to a halt. Passenger Miren McDonald said she and the other Dublin-bound passengers have been given no offer of accommodation and there is nobody to speak to at the airport. All the passengers have received is a voucher worth CA$15 (€9.28) from Air Canada. Ms McDonald said she feared that she and the other passengers would not be able to leave until the end of next week, as there are few scheduled flights to Ireland from Canada. 'We have been offered no help.'
Irish Times
7 hours ago
- Irish Times
European markets fall back as they await outcome of summit on Ukraine
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