Committee on Budgetary Oversight has published its Pre-Budget 2024 Report

Speaking on the Report Committee Cathaoirleach Deputy Barry Cowen TD said “Budget 2023 took place in an environment characterised by rising energy prices, rising inflation, and a cost-of-living crisis. While some of these challenges have begun to slowly subside, they nevertheless pose a serious challenge for our economic and social wellbeing. The economic outlook is still characterised by higher-than-normal inflation, high energy prices, and the impact of rising interest rates can now be felt across the economy, from large businesses to small households.”

Deputy Cowen added “An additional challenge faced by Government will be to mitigate against these effects during a time where employment is at all-time highs, the economy is near capacity, and where increased spending can result in adding to already problematic inflationary issues. The Government therefore has, as acknowledged, a delicate balance to strike.

Having examined many of these issues during the course of its deliberations, the Committee has produced our Pre-Budget 2024 Report which we hope will contribute to the consideration of the measures employed in the Budget.”

Read the full Pre-Budget 2024 Report  

Some of the Recommendations contained in the Report are:

• The Committee notes the significance of the capacity issues in the Irish economy and highlights the need to address these challenges in a way that does not further add to inflationary pressures.

• The Committee notes concerns around the potential impact the housing shortage may be contributing to capacity issues in the economy and highlights the need for Budget 2024 to address this issue.

• The Committee notes the concerns of the potential increase in expenditure needed to meet the existing commitments in the National Development Plan.

• The Committee notes the Central Banks concerns that an expansionary budget will lead to an increase in short-run inflation and emphasises the need to exercise caution in this regard when considering budgetary policies.

• The Committee agrees, as has been widely discussed, that the current level of corporation tax should not feed into regular spending or tax cuts.

• The Committee recognises that the impact of inflation has on those in the lower income deciles and wishes to once again highlight the need for measures in the Budget to specifically target supports at those most in need.

• The Committee notes the significant spending overruns in certain Departments and recommends that these be fully reflected in the allocations for 2024, unless there is convincing evidence that the expenditure will not be repeated.

• The Committee supports the Government decision to spend beyond the 5% spending rule given the current inflationary environment.

• The Committee notes the concerns regarding the characterisation of core and non-core expenditure. The Committee recommends that strict criteria for the definition of non-core be agreed by the Government and bodies such as the Fiscal Council and Central Bank.

• The Committee notes the concerns around the use of once-off measures but due to the current inflationary environment supports their limited use for 2024.

• The Committee notes concerns regarding the labelling of “windfall capital investment” and recommends that “windfall capital investment” be included in core capital investment figures.