Government 'needs to move away from year-to-year budgeting', fiscal watchdog warns

Eva Osborne

The Irish Fiscal Advisory Council has said the Government needs to "move away from year-to-year budgeting" after it warned the coalition is "budgeting like there's no tomorrow".

The fiscal watchdog said there are no budgetary forecasts beyond 2026 and that the Government has yet to submit a revised medium-term fiscal plan to the European Commission.

Good planning and budgeting require forecasts that go more than 15 months ahead, it said.

In its Fiscal Assessment Report for November 2025, the Irish Fiscal Advisory Council (Ifac) said 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, Ifac said.

Ireland is going to face large budgetary challenges in the decades ahead. Costs from an ageing population and climate change are equivalent to €20 billion in today's money, Ifac warned.

"Against this backdrop, budgetary policy is adding money into the economy when it is not needed.

"The government is planning on spending most of its corporation tax receipts. Only 15 per cent of corporation tax receipts will be saved next year, down from 32 per cent this year."

Speaking to reporters on Tuesday, The Irish Times reported that Ifac chairman Seamus Coffey said the Government was required under European Union fiscal rules to submit a medium-term plan, which it did before the election last year.

“The programme for government from last spring indicated that this medium-term expenditure plan would be updated in the summer,” he said.

“This didn’t happen. We were hoping, perhaps, it would be published along with the budget. That, again, didn’t happen.”

In the report, Ifac reiterates its long-standing concern about the State’s ever-growing reliance on corporation tax receipts to fund spending increases.