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Irish Times
9 hours ago
- Business
- Irish Times
Big spending package advanced despite warnings on numbers becoming tighter
The summer economic statement is normally the Government's key piece of communication before the budget. But this year's comes with a serious health warning. The numbers may be revised, we are told, if the economy is hit by further tariffs. And the tariffs in place already and the Government's budget plans mean that the surplus next year will be 'considerably smaller' than the €6.3 billion anticipated in the forecasts published during the spring. The numbers, in other words, are getting tighter. In this context, it is notable that the Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers , put forward a planned budget package of a still relatively generous €9.4 billion, including a tax package of €1.5 billion. Spending growth is pencilled in at 7.3 per cent, with a 6.4 per cent rise in day-to-day spending. This may be a reduction from the average of 9.4 per cent-plus seen on average since 2019, but it remains well in advance of inflation. READ MORE Current spending is due to rise by 6.4 per cent next year. In recent years there have been regular overruns and this will be the case again in 2025. Importantly, the Ministers warned that the figures will have to be revised if the tariff situation worsens, as it may well do. So we will have to wait and see what level of tax revenue growth is anticipated next year and what budget surplus the Department of Finance anticipates. [ Tax and spending package of €9.4bn to form basis of Budget 2026 Opens in new window ] This is what will determine whether the budget numbers need to be adjusted – and if so, by how much. In recent years, the basic package has also been extended significantly on budget day by a cost-of-living package, including once-off measures. We are told this will not feature this year, probably. Battles may still lie ahead here. David McWilliams on how 'big incentives' to build could save Dublin city Listen | 36:51 If there is a need to adjust the figures, we are told that protecting capital investment and the large €102 billion five-year programme outlined in the revised National Development Plan will be the priority. Large cuts to State investment during the austerity years after the financial crash have cost the Republic dear. That said, if there is a need to revise the figures, there will surely be tensions. As things stand, some €850 million of the €1.5 billion tax package will be eaten up by the promised cut in the hospitality VAT rate. This will leave small pickings for income tax cuts, unless revenue is raised elsewhere. Applying the VAT cut to just food-based firms, while administratively difficult, would save some of the cash. But political difficulties loom here. [ NDP: €275bn spend over next 10 years, with housing receiving biggest boost Opens in new window ] The big questions will, however, be about expenditure. Restoring control over day-to-day spending will be a big challenge. And if the budget numbers tighten, then the State will face the choice of borrowing to finance its increased investment plans. In the middle of all this is the commitment to billions into two funds each year, to help pay future bills. We still have to see how the Department of Finance sees all this fitting together. The summer economic statement, bar its indications of the budget day package, did not take us much further, except for a warning that if a trade war erupts, then all bets are off.
Irish Daily Mirror
10 hours ago
- Business
- Irish Daily Mirror
Government slammed for 'vague' €275.4 billion National Development Plan
The government's announcement of the €275.4 billion National Development Plan (NDP) has been slammed as ministers have been accused of keeping it vague due to an expected lacklustre budget. Taoiseach Micheál Martin, Tánaiste Simon Harris and Independent TD Seán Canney announced funding proposals for the latest NDP on Tuesday. It's the government's long-term plan for large-scale infrastructure projects, covering the period up to 2035. The plan is reworked and reviewed every few years. Despite this being the largest ever capital investment plan in the history of the State, the government has been slammed for the 'unusual' decision to provide few details on the projects. This could be down to an expected disappointing upcoming budget, as politicians may want to save the details of exciting projects until then. However, the Taoiseach said this lack of detail was done purposely to give ministers a chance to draw up a list of projects, with announcements coming 'closer to the budget'. Research Professor at the Economic and Social Research Institute (ESRI) Dr Alan Barrett said it's difficult for anyone to sink their teeth into this report as it's so vague. Speaking on RTÉ's Today with Claire Byrne on Tuesday, he said: 'We have been used to over the years getting the details of the projects, why it's not happening on this occasion we are not entirely sure. 'Today's document reminds me of the annual estimates process, where departments are being given an indication of what their allocation is going to be. "The idea that now we are having a document with a significant amount of money being launched but not getting a clear sense of what the projects are - but perhaps more importantly the extent at which they relate to one another - that is a little concern I would have today.' Despite economic experts and the opposition finding the lack of details in the NDP disappointing, here is what we know so far: Housing From 2026 to 2030, the government plans to invest €35.955 billion in housing, with Public Expenditure Minister Jack Chambers saying housing is the main priority. The Taoiseach echoed this as he outlined a target of 300,000 new homes in this timeframe, with 12,000 a year being social housing. Minister Paschal Donohoe and Minister Jack Chambers announcing details of the revised National Development Plan and the Summer Economic Statement at Government Buildings (Image: Stephen Collins / Collins Photos) This is in line with the current Programme for Government targets. Social Democrats housing spokesperson Rory Hearne said 'throwing billions of euros at the housing crisis without announcing a radical reset in policy" is not going to work. He added that the NDP 'gives no indication that the government is planning to move away from the measures that have plagued housing provision in the last decade". Sinn Féin's housing spokesperson Eoin Ó Broin said the plan will not result in "increased delivery of social and affordable homes". Water A total of €12 billion - outside of the housing allocation - has been earmarked for water infrastructure development. The Taoiseach said this investment is critical to 'support new house building industrial development and regional growth'. Health Some €9.25 billion has been allocated to the health service under the NDP, which is almost double the investment of the previous plan in 2021. There is little detail on projects this will be used on, as the new plan outlined seven previous health projects that have been completed under the NDP in the last three years. The Irish Hospital Consultants Association (IHCA) has welcomed this allocation to the sector. However, with little detail on projects, it has called on Health Minister Jennifer Carroll MacNeill to ringfence the required funding for the implementation of Electronic Health Records and prioritise the rapid expansion of our current hospital capacity. Transport Some €24.33 billion is being invested into transport up to 2030, with €2 million earmarked for 'low-carbon transportation projects'. This includes the MetroLink underground line for Dublin. However, it's not expected that construction will begin until at least 2028. However, €2.2 billion has been slammed as 'not enough' by some, including Labour's transport spokesperson Ciarán Ahern. He said: 'MetroLink is supposed to be the country's flagship public transport project and €2 billion is no small sum, but in the context of the overall cost of the project, it's nowhere near enough. "We're talking about a fraction of what's actually required to see this project through." There is no mention in the NDP of other projects that the money will be used on with respect to other public transport services such as buses or trains. Climate and energy Exchequer funding of €5.6 billion has been allocated to climate and energy, as the Taoiseach said expanding investment here is 'critical to our national security and to realising the enormous potential of AI to future economic development'. The government is increasing its equity shareholdings in ESB to €1.5 billion and EirGrid to €2 billion, which was widely welcomed by both. Education The Department of Education and Youth is receiving €7.55 billion in the new NDP. It will be used to facilitate the construction of school places in primary, post-primary, special classes and special schools between 2026 and 2030. A further €4.55 billion is allocated to higher and further education. Culture, Communication and Sport Some €2.22 billion has been earmarked for this department, however, there isn't yet any information on how the funding will be used. Subscribe to our newsletter for the latest news from the Irish Mirror direct to your inbox: Sign up here.
Irish Times
18 hours ago
- Business
- Irish Times
Budget plan for €9.4bn public spending boost will be reconsidered if tariffs hit
Plans to spend an extra €9.4 billion on public services , tax cuts and building projects next year will be reconsidered if the US imposes tariffs on EU imports, Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers said on Tuesday. But they, along with Taoiseach Micheál Martin and Tánaiste Simon Harris , pledged that if there is pressure on spending plans, they would protect infrastructure budgets and cut growth in current spending on public services, welfare and tax cuts to realise the necessary savings. The Coalition leaders launched a review of the National Development Plan (NDP), promising to spend €100 billion between now and 2030 – a €30 billion increase over what was planned – to improve water, energy, transport and housing infrastructure. [ National Development Plan shows the Government is about to bet big on capital expenditure Opens in new window ] The ambitious plans were overshadowed by the threat of a trade war between the European Union and United States, which Mr Donohoe and Mr Chambers admitted could compel them to revise plans published on Tuesday for a budget day package of €9.4 billion in October. READ MORE In the event of high tariffs, the Government would 'recalibrate its fiscal strategy' and reduce the budget package to keep public finances stable, said Mr Donohoe. Already, the plans for October's Budget 2026 envisage growth in public spending being trimmed from 8-9 per cent of recent years to 6.4 per cent next year. Mr Donohoe said there would be a package of tax cuts of some €1.5 billion. But he added that the cost of cutting VAT on hospitality – a Fine Gael election promise included in the programme for government – would amount to nearly €1 billion in a full year, meaning the scope for any tax adjustments to rates and bands would be reduced significantly. Tariffs: Why has Donald Trump threatened the EU again? Listen | 47:35 'It would not be right to grow the scale of our tax package,' said Mr Donohoe. The Coalition published the amended NDP and summer economic statement at Government Buildings on Tuesday. The NDP promises expenditure of €25 billion on capital projects in 2026, with the amount increasing every year and peaking at €28 billion in 2029. The total is set to reach more than €100 billion by 2030. The plan was immediately criticised for not identifying individual projects, though the Government did point to a small number of 'megaprojects', including the Dublin Metro and two big water schemes: the Shannon to Dublin water supply project and Greater Dublin Area drainage initiative. Social Democrats spokesman on public expenditure Cian O'Callaghan said the plan is 'so vague it doesn't even rise to the level of wish list'. Sinn Féin 's health spokesman David Cullinane said the allocation for health falls 'far short of what is needed' over the next five years. Labour 's Marie Sherlock, meanwhile, has said the €2 billion allocated for the MetroLink is 'hardly a vote of confidence that the project will be substantively progressed in this decade'. The summer economic statement, normally a key document in the preparation of the October budget, was considerably shorter and less detailed than usual. It contained several warnings, however, about threats to the State's public finances from several sources. [ NDP shows Government about to bet big on capital expenditure Opens in new window ] 'Even before the full impact of tariffs takes hold, it is increasingly evident that heightened levels of uncertainty have prompted firms to delay investment plans and households to step up precautionary savings. These headwinds are set to slow the pace of economic expansion,' it said. The document also warned that the 'headline surplus is now likely to be considerably lower than set out in the spring'. It flagged that spending pressures in several Government departments will require additional funding above their agreed allocations, prompting Mr Chambers to warn of the need for spending discipline and an end to bailouts in the second half of the year – a now familiar necessity in some departments.
Irish Independent
a day ago
- Business
- Irish Independent
Minister Harkin welcomes record €275.4bn National Development, pledges regional investment for Sligo, Leitrim and Donegal
The updated plan, published by Minister for Public Expenditure, National Development Plan Delivery and Reform, Jack Chambers, includes an additional €34 billion in capital funding compared to the original 2021–2030 framework. This brings the total investment to €102.4 billion over the next five years, with a further €100 billion earmarked through to 2035. This revised NDP represents the most substantial capital allocation in the history of the State, aiming to secure Ireland's future and deliver on vital infrastructure projects. 'This is a once-in-a-generation investment that must deliver real progress for people in Sligo, Leitrim and South Donegal' said Minister Harkin The revised NDP focuses on transformational infrastructure across key sectors including housing, water, energy, and transport, alongside major investments in health, disability services, and education. Speaking after the launch Minister Harkin said ' I support the plan's emphasis on Balanced/Equitable regional development, ensuring all parts of the country benefit from this investment. This is absolutely crucial for me because we have seen a history of underinvestment in the Northern and Western region. "This Review commits to ensuring a 50:50 distribution of future growth as outlined in the National Planning Framework and this will mean more investment in infrastructure, roads, rail, water, electricity, the construction of homes for families and individuals in the region and the provision of adequate services especially in healthcare and education including lifelong education which relates to my Department. "We also need to ensure sensible, long-term planning, particularly in the face of global trade tensions and ongoing economic uncertainty. Equally investing in children's disability services and expanding access to childcare and school places is an important part of the plan.' In regard to her own Department she stated: 'Investing in further education and vocational training to meet the growing demand for construction workers required to deliver the expanded pipeline of national projects is central to the delivery of housing. "My department's emphasis on expanding the number of apprenticeships especially in construction and green skills will play a central role here and combined with the drive to embed modern methods of construction in our apprenticeship courses we hope to see an acceleration of construction delivery in the next number of years'. 'Each Government Department has now been charged with delivering essential infrastructure, and I will continue to ensure that the revised NDP achieves meaningful outcomes for the people of Sligo, Leitrim and South Donegal,' she said.
The Journal
a day ago
- Business
- The Journal
Government warns ‘deterioration in tariffs' would result in ‘recalibration' of €9.4b budget package
THE GOVERNMENT HAS cautioned that a 'deterioration in the tariff landscape' would result in a 'recalibration' of its €9.4 billion Budget 2026 package announced today. 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'. Advertisement 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'. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
