Is it time to say goodbye to the recent run of budget surpluses which have sustained public spending?

Ministers Paschal Donohoe and Jack Chambers, responsible for Finance and Public Expenditure respectively, appear to think so, according to weekend press briefings.

They are seeking to persuade cabinet colleagues to restrain themselves in seeking extra spending allocations in the budget divvy-out.

The budget for 2026 will be introduced in October and the lobbying is already under way.

There are two major threats to the public finances coming from the Trump administration in the United States.

A tariff war between the EU and the USA will damage growth prospects and hence Government revenue, a risk faced by all European countries.

Ireland is more exposed than most given the high trade volume with the USA. The second threat is quite separate and additional.

It arises from the inrush of corporation tax revenue from US multinationals in recent years, especially since changes made to the US corporate tax code under Trump’s first administration have had effects which were unexpected.

As outlined by UCD professor Aidan Regan in the Business Post, US companies have been able to park profits for taxation in Ireland at lower rates than apply back home, even though these companies would ordinarily be deemed to be tax-resident in the USA. The profits need not even be earned from productive activity in this jurisdiction and the tax bonanza has come to the attention of Howard Lutnick, the US commerce secretary, who has described this piece of Irish good fortune as a ‘scam’.

It is all perfectly legal, but can be ended unilaterally by the USA, even if the tariff war peters out.

Europe is exposed to an economic slowdown because of a tariff war, but Ireland has been the beneficiary of what may have been an accidental flaw in the American tax code, with the commerce secretary on the case.

A ‘senior Government source’ told Jennifer Bray, political editor with the Irish edition of the Sunday Times, that ‘there will still be additional spending in the budget, especially on capital, but choices will have to be made’.

If there is no restraint on current spending, and nobody has even hinted at tax increases, there can be no budgetary correction without actually cutting capital spending, only recently restored to levels reached before the 2008 banking bust, unless the Government expects the corporation tax receipts to keep rolling in.

This expectation is not reasonable in the light of Lutnick’s remarks and that means the Irish public finances face two hazards, from tariffs as do all EU members and from a unilateral withdrawal of the corporation tax windfall, of which Ireland is the principal beneficiary.

On trade, the EU is a tariff-free internal market and a customs union with a common external policy.

Individual EU states cannot do special deals with the USA and small members will have modest influence on the collective stance of the European Commission.

On the corporation tax anomalies, the US Congress can change the rules whenever it sees fit and has every incentive to do so.

There has been collateral damage domestically from the corporate tax windfall, including the commitments in the Programme for Government to continued spending increases and tax giveaways culled from the Fianna Fáil and Fine Gael election manifestos.

These are the parties which abolished water charges and have declined to facilitate local authorities minded to broaden the revenue base through residential property tax.

The populist voter-friendly budgets of recent years are going into reverse. Irish Governments have always opted for capital cuts when trouble strikes, a feature of the post-crash period when the volume of public capital spending halved and an episode which helped generate today’s infrastructure deficits.

A pre-emptive tightening of public spending should ideally consist of a serious effort to prioritise the capital programme, which would require that large, medium-term commitments be reviewed.

The biggest of these is the plan for a single, largely underground, railway line from central Dublin to Swords via Dublin airport.

Cost will be, in today’s prices, of the order of €14bn or €15bn, with possible upper estimates above €20bn.

There are other elaborate plans for a railway-building programme around the country which appear to have been quietly dropped and the expensive Metrolink could be next.

It would be nice to have a super underground train to the airport, but how nice?

There has been no independent estimate of the project’s costs or benefits and Dublin already has direct and popular bus services to the airport through the Port Tunnel.

If €15bn is earmarked for Metrolink in an era of tighter budgets, its supporters should explain which projects elsewhere, overdue road improvements for example, will face the chop to release the funds.