The EU has warned the government that Ireland is at risk of spending beyond its means.
The warning comes in the European Commission’s opinion on Ireland’s draft budgetary plan for 2026.
It concludes that whilst the government’s budget generally complies with the EU’s Stability and Growth Pact obligations, “Ireland is at risk of exceeding the maximum growth of net expenditure”.
The Stability and Growth Pact is a set of rules laid out by the EU designed to ensure “sound public finances”.
If Ireland were to exceed the maximum growth of net expenditure it would mean that the government was spending beyond the state’s means.
Ireland’s budget watchdog, the Irish Fiscal Advisory Council, is more blunt in its assessment this morning:
“The government is budgeting like there’s no tomorrow. There are no budgetary forecasts beyond 2026”, it warns.
“The government needs to move away from year-to-year budgeting. Moving to multi-annual budgeting would give government agencies more certainty over their future funding. This would aid better planning and delivery of public services”, the watchdog advises.
Forecast cumulative net expenditure growth rate is projected to “slightly exceed” the maximum threshold recommended by the European Council, the European Commission warns.
Consequently, Ireland is at risk of exceeding its medium-term spending targets despite the overall compliant fiscal position.
Nonetheless, the European Commission signed off Ireland’s budget plans along side Cyprus, Estonia, Finland, France, Germany, Greece, Italy, Latvia, Luxembourg, Portugal and Slovakia as “assessed compliant”.