Opening Statement by Dr Robert Kelly, Director of Economics & Statistics at the Oireachtas Committee on Budgetary Oversight

Good afternoon Cathaoirleach and members of the Committee. I am joined by Dr Thomas Conefrey, Head of Irish Economic Analysis, and we thank you for the opportunity to engage in advance of October’s Budget. Every day, train commuters across Ireland hear a familiar warning: mind the gap. This phrase aptly captures the central challenge facing our public finances.  This gap is the underlying budget deficit. While the headline fiscal position has been in surplus, the underlying position has deteriorated, with the gap growing from an estimated €800 million in 2019 to €7.2 billion in 2025. To put this in context: in 2019, the gap was equivalent to about a third of public spending on transport. By 2025, it had grown to equal that year's full public spend on transport, plus agriculture, environment, climate and communications. The wider gap reflects government spending growth of 55 per cent in nominal terms since 2020, a third faster than the euro area in real per capita terms. While corporation tax receipts1 bridge this gap today, this creates a dangerous dependence on potentially transitory revenue. Turning to the outlook, the Summer Economic Statement (SES) outlines a more modes...