Government warned increased expenditure must be balanced with increased taxation

The Government is being warned that any new increases in expenditure - such as funding higher public sector pay - would have to be offset by lower spending elsewhere, or changes in taxation.

The latest report from the Irish Fiscal Advisory Council says the economy has shown solid growth this year but the pace of that growth has slowed in recent months.

It says the economy appears to be operating close to capacity and reducing our level of debt must be a key priority.

The council says better debt control would help protect our public finances against fallout from Brexit and other internal and external risks.

The Advisory Council's Michael Tutty says any new increases in expenditure - such as funding higher public sector pay - would have to be offset by lower spending elsewhere, or changes in taxation: "We are reaching the limit already in what they did in the Budget.

"And even they are using up some of the room for maneuver in 2017, because the carryover costs, the full costs of the social welfare measures and the tax measures that were brought in on this Budget, have a significant extra cost in 2018."

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