The Government is to make €8.3 billion in additional funding available for use in Budget 2025, its last before the next general election.
€1.4bn of that money is to be spent on funding tax cuts and €6.9bn is to be used for increased expenditure.
It means that total spending will rise by 6.9% in 2025, once again breaching the Government’s own National Spending Rule, which is supposed to limit overall annual spending increases to 5%.
The Government has also approved a supplementary €1.5bn in funding for the health service this year.
It said this money is needed because of the need for better quality healthcare, the complexity of providing health services and the legacy impact of a post pandemic and heightened inflationary environment.
The Government has said this decision was made in order to accommodate higher capital spending and to provide additional public services against the backdrop of a larger than assumed population.
The details are contained in the Summer Economic Statement, which was approved by the Cabinet this morning and is being published this lunchtime.
The document sets out the broad fiscal parameters ahead of the budget.
Last week it emerged that the Department of Health is already €1.1bn over budget for this year.
Minister for Public Expenditure Paschal Donohoe has held a number of meetings with Minister for Health Stephen Donnelly in recent weeks to try to formulate a plan to deal with the overspend.
The budget will be the first to be led by new Minister for Finance Jack Chambers who took over the brief just two weeks ago following the nomination of Michael McGrath to the European Commission.
A strong performance by the exchequer in the first six months of the year is likely to raise expectations of a pre-election giveaway budget.
However, last week Mr Chambers sought to downplay the prospect of this, saying the Government had made it very clear that it wants to have a very sensible and careful budgetary policy.
The Taoiseach has said the upcoming Budget will try to “balance” the need to support people during a cost of living crisis and the need for prudent fiscal spending.
Speaking on his way into a meeting of the Cabinet, Simon Harris rejected opposition suggestions that the Summer Economic Statement would be the first stage of a giveaway budget.
He said “I always wonder what that phrase means” and that “every budget” gives money away, but that he hopes autumn’s budget will “provide real and practical assistance in terms of income” for people.
The Taoiseach would not say when asked what the overall budget package will be in the Summer Economic Statement, or the tax versus spend breakdown, saying this must be agreed by Cabinet today.
The Irish Fiscal Advisory Council (IFAC), Central Bank of Ireland and Economic and Social Research Institute have all urged the Government to show restraint in the budget, so as to not risk overheating the economy.
Exchequer returns for the January to June period last week showed that the State is on course to record a surplus of €8 billion this year due to bumper tax receipts, driven in the main by windfall corporation tax returns.
