Budget will have only €500m to splash out

The new chief at the country’s budget watchdog said the next finance minister will have relatively little to spend in October’s budget because so much of the country’s corporate tax windfall has already been spent in previous budgets.

Seamus Coffey, chairman at the Irish Fiscal Advisory Council (IFAC) also said the potential €3bn in proceeds from the sale of shares in AIB should go to pay down debt and not be used to pump up levels of spending further.

Some opposition parties have called on the Government to forego paying down the national debt more quickly and use the potential proceeds of more than €3bn from the part-privatisation of AIB to alleviate the housing crisis. Many business and industry groups have separately called for large increases in capital spending on roads, rail and schools.