Ifac warns that premature tax cuts could overheat the economy

Irish Fiscal Advisory Council warns that a downturn in the multinational sector would be a 'major fiscal challenge for Ireland'

The finance and enterprise departments have increased supports for businesses this year but Finance Minister Michael McGrath remains firm on his decision not to cut the Vat rate for hospitality. Picture: Brian Lawless/PA

The budgetary watchdog has warned government to show restraint this year when it comes to taxes, but a looming election could push politicians in the other direction.

The Irish Fiscal Advisory Council (Ifac) said the economy continues to “perform well” and therefore policymakers may be inclined to loosen budgetary policy through tax cuts, a move that Ifac suggested would be premature.