Overheating the economy could 'hamper delivery of National Development Plan and housing targets'

'Temporary measures in previous budgets helped households deal with higher prices, but their phasing out will cause affordability issues.'

Overheating the economy as part of the budget process could “hamper delivery of the National Development Plan and national housing targets”, TDs will be warned on Thursday.

The budgetary oversight committee will also hear suggestions that a “more modest budget package” should be unveiled on October 7.

Economic and Social Research Institute director Alan Barrett will warn about the overheating of the economy and the risks posed by the winding down of cost-of-living measures.

He will outline several risks to the economy, including the possible volatility in windfall corporate tax revenues.

“Overheating is often thought about in terms of inflationary pressures and price rises, but we are also concerned about capacity constraints that could hamper delivery of the National Development Plan and national housing targets,” Mr Barrett will say.

“Housing and public infrastructure are crucial determinants of quality of life, but they are also important for augmenting the productive capacity of the economy.”

Mr Barrett will also say the temporary measures in previous budgets helped households deal with higher prices, but “their phasing out will cause affordability issues, particularly for the older population and those with disabilities, if headline welfare payments fail to keep pace with income growth”.

The Irish Fiscal Advisory Council will say that “given that the economy is performing well, this is not a time for a large budget package”.

“The budget day package should be smaller than the €9.4bn that is currently planned,” it will say.

John McGeady, CEO of Social Justice Ireland, will say 630,000 people are living below the poverty line, 190,000 of whom are children.

He will say the group is “concerned about the sustainability of the Government’s fiscal position” and that without corporate tax windfalls, the economy would be in deficit.

“It raises questions about future economic policy, and how we will fund the infrastructure and services required to meet the needs of a growing and ageing population,” he will say.

He will call for all social welfare rates to be increased by €25, as well as a €50 boost to child benefit.

Elsewhere, the Oireachtas Parliamentary Budget Office published its pre-budget 2026 commentary on Wednesday.

It advised of growing “fiscal vulnerabilities” and called for a “more prudent approach to public spending”.

It noted that inflation “remained stable at 2% in August” and that while food and non-alcoholic beverages rose by 4.7%, this was “offset by declines in other areas”.

“This stable inflation environment provides the government with an opportunity to pursue a prudent fiscal stance, reducing the need for additional cost-of-living measures,” it said.