The Irish government has projected a budget surplus of over €8 billion (£6.8 billion) for 2024, representing nearly 3% of the national income. This marks the third consecutive year that the government will collect more in taxes than it spends. Ireland’s ability to achieve surpluses is attributed to a significant increase in revenues from corporation tax, leading to the initiation of a sovereign wealth fund to manage some of these windfall earnings. The goal is to accumulate assets totalling €100 billion (£86 billion) by the mid-2030s.

Finance Minister Michael McGrath announced a projected headline surplus of €8.6 billion (£7.4 billion) for the current year, based on anticipated tax revenue of nearly €92.1 billion and a growth rate of 4.6%. However, he cautioned that this surplus heavily relies on volatile corporate tax receipts, which have surged from €4 billion to €24 billion over the past decade.

The Finance Ministry forecasts Ireland’s domestic economy to expand by 1.9% this year and 2.3% next year, although this year’s estimate has been slightly revised down since October’s budget. Domestic output is measured using Modified Domestic Demand (MDD), which excludes the impact of multinational companies on Ireland’s GDP measurement. MDD saw rapid growth post-pandemic but slowed to just 0.5% last year due to inflation and higher interest rates affecting disposable incomes.

Minister McGrath noted that while there are inflationary pressures, the economy appears to be in reasonably good condition, with expectations for a rebound in economic activity. He highlighted the labor market as the brightest economic aspect, with Ireland projected to maintain near full employment in the foreseeable future.

Despite the robust economic performance, the governing coalition faces challenges in public opinion polls. High housing expenses and strained public services have left many feeling excluded from the country’s prosperity.

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