During the Celtic Tiger era, memoranda in the Department of Finance frequently highlighted the pressures building in a booming economy. The minister for finance appointed in 1997, Charlie McCreevy, initially committed to keep nominal current spending growth to 4 per cent annually. He dismissed the European Commission’s view that his budget in 2000, involving a £2 billion “giveaway”, would be inflationary. The following year, current spending increased by 17 per cent. Unwillingness to follow advice about sustainability and reluctance for political reasons to temper an overheating economy ultimately generated a crisis.

The establishment of the Irish Fiscal Advisory Council (Ifac) after the economic crash was designed to formalise the need to learn the lessons. In 2022, its own review of its first 10 years identified too many “worrying echoes of the past” and failure to address long-term pressures and over-reliance on corporate tax windfalls.

Ifac’s report last month not only advised that the Government’s proposed budgetary package for this year is too large, but that “spending overruns have become routine and have repeatedly pushed spending above budget-day plans”. Total spending last year was €4 billion more than allowed for in the original budget for the year. In relation to the public service pay deal agreed in 2024, to cover two-and-a-half years, Ifac has also observed that Budget........

© The Irish Times