Donohoe insists budget won't do anything to harm long-term health of economy

Government expected to resist temptation to use billions of euro in surpluses to chase votes

Paschal Donohoe: 'This will not be a giveaway budget.' Picture: Damien Storan/PA Wire

The budget will not "do anything to harm the long-term health" of the Irish economy, the public expenditure minister has insisted.

Paschal Donohoe tempered expectations of a giveaway budget on Thursday, saying that while there is money available for the Government to put towards spending and tax cuts, he and Finance Minister Michael McGrath will resist the temptation to use the billions of euro in surpluses to chase votes from the public.

Mr Donohoe has faced some internal criticism within Fine Gael from politicians who feel that he has been too prudent with the public finances.

However, speaking at Cabra Library in his Dublin Central constituency, he said this type of management had allowed the economy to recover from the financial crash and covid.

"The reason for our economy being in a position to help and intervene like we did during covid and then in a position to help with all of the issues associated with the rising cost of living is because our public finances were restored to health. 

"So yes, we will help. Yes, we are aware and want to help with all of the challenges that our society is facing with the cost of living.

"But we won't jeopardise the health and long-term resilience of our public finances. Because that underpins our ability to do everything.

"I am very fortunate to have been in a position where I've now been involved in decisions that have seen our finances going back into surplus twice."

Mr Donohoe said the 6% projected rise in spending will mean the budget will be "big" but said that no decisions on specifics have yet been made.

“We will have to make a decision on the design of those matters in September and October. And myself and Minister McGrath said before the summer that we have not made decisions in relation to what those measures will be yet.

“There will be measures within the budget to focus on the cost of living because we fully appreciate that for so many, even though inflation is coming down, prices are still going on. And it's a huge challenge. The budget will help with that.”

Scrapping USC 'not realistic'

Mr Donohoe added that he does not believe that scrapping the Universal Social Charge (USC) — a pledge his Fine Gael party made in the 2016 election campaign — is now "realistic".

“I've said many times since 2016 that the Universal Social Charge now funds so many of the public services that our society depends on it.

“Its abolition is not a realistic objective.”

Mr Donohoe also re-committed his own future to Irish politics, saying that he will run again in the constituency.

"I'm in the heart of Dublin Central and what clearer message can I give out about the commitment, can I give out to the communities that have been good enough to elect me then to be here and launch this initiative? I'm already performing a role in Europe.

"I'm already in Europe, so to speak, as president of the EuroGroup, and I remain completely committed to my work here in Irish politics and completely dedicated to how I can continue the work that I've begun."