Finance minister defends spending plans following watchdog’s warning

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. When we see a typical household that might have outgoings of 50,000 euro a year, that 2% increase equates to 1,000 euro if the price level is higher Seamus Coffey, IFAC chairman IFAC chairman Seamus Coffey said the extra spending by the government at budget time can give “an illusion of a gain” which is then offset by general cost increases. “While households might be benefiting from the additional government spending on one side – so they can see a direct benefit from the additional spending the government is doing – there can be indirect costs through a higher general price level so it can be an illusion of a gain being offset by these indirect costs.” The IFAC said the government should “stick to its rule” and if it does it can “curb price pressures, ensure sustainable growth, help Ireland weather future recessions”. “Our spending growth this year is pretty much in line with what it was last year, because there’s been an increase in the cost of providing the existing levels of service, in terms of the inflationary environment and the cost of providing public services, and the additional capital spend we’ve had has resulted in us increasing beyond the 5% to 6.9%.” He added that excess corporation taxes were being saved for the future in two funds set up during the lifetime of the government: The future Ireland fund and the infrastructure, climate and nature fund. “It’s government’s role to strike a balance between the Fiscal Advisory on the one hand, who want us to restrict spending, or indeed contain the existing levels of services we have in terms of public services; and others who call for much greater levels of spending growth and that’s for us to strike a balance, and I think we’ve done that.” The fiscal watchdog also noted that employment rates in Ireland are at record highs, with an 84% employment rate expected in 2025.