Paschal Donohoe urged to stick to €1.7bn budget plan

Finance Minister Paschal Donohoe will be safe from potential EU spending breaches if he sticks to an early summer plan for a package of €1.7bn in tax and spending measures in his first budget next month, according to the Irish Fiscal Advisory Council.

In its pre-budget statement, the watchdog repeated its warning that Mr Donohoe has less room than may appear due to the carryover costs of spending commitments the Government made in earlier years.

The full-year costs of earlier tax cuts and pension increases, and the cost of the new public sector pay deal, as well as the costs of an ageing and growing population, mean the Government effectively has only €500m of the €1.7bn for new measures, if it is to adhere to the EU fiscal rules, according to the council.