Dáil Éireann Debate, Thursday - 1 February 2024
238. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied that Ireland, along with its European colleagues, continues on a positive trajectory in terms of fiscal policy; and if he will make a statement on the matter. [4877/24]
View answerWe begin this year in a strong position, with the end-2023 Exchequer returns showing a headline surplus of €1.2 billion, reflecting the underlying strength of our economy, particularly in respect of the labour market.
Tax receipts for 2023 reached a new record level of €88.1 billion, with growth driven by income tax, VAT and corporation tax. On the expenditure side, gross voted expenditure in 2023 was €94.7, which was €5.9 billion ahead of 2022.
This equates to an estimated surplus on a General Government basis last year in the region of €7.8 billion or around 2¾ per cent of modified national income (GNI*).
For this year, a General Government surplus of €8.4 billion was projected at the time of Budget 2024. This would be 2.7 per cent of GNI*. Our public debt is expected to remain high, albeit on a downward trajectory, at €222.2 billion (72.3 per cent of GNI*).
To put this in context, on aggregate the EU’s debt and deficit positions remain elevated. In 2024, twelve countries are projected to have debt levels above the 60 per cent of GDP threshold, with six of these above 100 per cent of GDP. Similarly, twelve countries are projected to have a deficit above the threshold of 3 per cent of GDP. In contrast, Ireland is one of only four Member States with a projected surplus.
That said, the EU is expected to see continued improvements in its aggregate fiscal position in 2024. The Commission forecasts the EU aggregate deficit to decline from 3.2 per cent of GDP in 2023 to 2.8 per cent of GDP in 2024 and the debt-to-GDP ratio to fall from 83.1 per cent in 2023 to 82.7 per cent in 2024.
However, beneath the undoubtedly positive headline numbers there remain risks to the Irish public finances: the surplus is flattered by an estimated €11 billion in windfall corporation tax receipts that are not linked to our domestic economy. When these volatile receipts are excluded an estimated underlying deficit is in prospect for this year.
Government has taken steps to mitigate this risk, announcing the establishment of two new long-term investment funds that will allow us to invest these receipts to part-fund the response to future structural challenges.
Of course, the best way to ensure that we remain on a positive fiscal trajectory over the medium-term is by continuing to a pursue a balanced budgetary strategy that allows for continued investment in our public services and the productive capacity of our economy while keeping public expenditure growth at sustainable levels.
