The Department of Finance this week published its annual Summer Statement outlining the expected overall level of Government spending which will be announced in October’s budget. Total exchequer spending is projected to rise by €7.9bn when compared to the last budget. The budget is also set to include €1.5bn in tax cuts, bring the total of budget measures set to be announced to €9.4bn.

This means total voted expenditure is set to hit €116.6bn, more than twice the €56bn in spending seen a decade ago (see Figure 1).

The Summer Statement gives a breakdown of how Government spending in 2025 has progressed compared to what was announced in October last year. It notes that tax receipts were running €4.7bn, or 10.5%, ahead of last year in the six months to June, while government spending was running €3.8bn (8.2%) ahead of 2024 over the same period.

Notably, spending at €50.9bn was ahead of tax receipts of €49.5bn.

The report notes that it is likely that additional funding will be required for a number of Government departments before the end of this year. It says that this will “further support the delivery of key social and economic priorities” and will increase the provision for Government spending for 2025 to €108.7bn from the €105.4bn agreed on Budget Day last year.

There is a further €5.5bn of extra spending in 2025 which comes under the heading of ‘strategic equity/funding’ which the report said was made available to progress plans for the delivery of critical supporting infrastructure to support the delivery of housing targets and enhancing Ireland’s competitiveness.

Echoing the priorities announced in the updated national development plan, the report says there is a need for the State to: Provide housing for the growing population; support the growing economy while ensuring competitiveness; provide critical infrastructure; support future economic growth to improve living standards.

It says that as the Government looks to increase infrastructure delivery, “consideration need to extend beyond funding to address barriers to delivery, such as planning and approval processes and labour supply shortages. Reforms underway in these areas are critical to unlocking timely delivery, underpinned by the principle of value-for-money”.

Warnings

The Summer Statement does come with some warnings about the outlook for growth, with the most obvious one at the moment the uncertainty over the future of global trade.

While the statement does not mention the US president by name, it does say “the short-term outlook appears to have deteriorated somewhat, as international trade policy increasingly pivots towards protectionism”.

It notes that measures of trade and economic policy uncertainty are now higher than they were during the Covid-19 pandemic. This uncertainty can hit growth as companies hold off on making long-term capital investments, households postpone spending, there is a reduction in foreign direct investment, and finally there is an increase in the financial risk premium.

This means that financial markets could become concerned about future growth prospects which would lead to an increase in borrowing costs for countries.

Ireland’s gross Government debt has been relatively stable at just above €200bn since 2012, while it has fallen from 160% of modified gross national income in 2012 to 68% in 2025.