Taoiseach accepts need to 'rein in spending' following Central Bank's warning

Micheál Martin added that the impression that opposition politicians give is that the Government is 'spending very little' in the upcoming budget

Micheál Martin said that the Central Bank also remarked on the resilience of the Irish economy, adding that there must be increased investment in infrastructure. File Picture: Damien Eagers

The Taoiseach has accepted that the Government will have to “rein in spending” amid warnings that the Budget 2026 package is too large.

However, Micheál Martin said the commentary from the Central Bank provides “realism” amid suggestions from the opposition that the Government is not doing enough to address cost-of-living concerns.

The Central Bank has warned that the budget package of €9.4bn of additional spending is "too large" and "unnecessary".

At the National Ploughing Championships, Mr Martin said that the Central Bank also remarked on the resilience of the Irish economy. He stated that there must be increased investment in infrastructure.

“On the current side, we do acknowledge that we have to rein in, to a certain extent, current expenditure and the growth rate in current expenditure,” the Taoiseach said.

“To do that, we will target current revenue and current expenditure to those most in need to limit potential overheating of the economy or any prospect of overheating the economy. That is the strategy.

We acknowledge that expenditure is high, but it is in the context of us having to catch up significantly on infrastructure deficits in our society

Everyone in Dáil Éireann is looking for more and more public expenditure, and the Government is accused of not spending enough, he said.

“I think the Central Bank's report, in that sense, is timely because it does bring a degree of realism to the debate which is important.”

Mr Martin added that the impression that opposition politicians give is that the Government is “spending very little”.

'Nothing realistic'

At the Sinn Féin tent, Ms McDonald blasted Mr Martin’s comments, saying that there is “nothing realistic” about the hardship being experienced by families.

“People in their families, in their homes, have to make ends meet,” she said. 

"The Government is proposing to leave families and working people high and dry. There's nothing realistic about that. That's actually disgraceful, in our view.”

The finance minister has accepted the Central Bank's warning, but said that there will be spending "in and around" €9.4bn.

Speaking on RTÉ's News at One, Paschal Donohoe said that the Government does listen to warnings around the economy "very carefully". He also admitted that spending needs to come down.

"We need to moderate and pull it down, and this is what myself and minister [for public expenditure and reform] Jack Chambers are doing," he said.

"[We are] aiming to do this over a number of budgets and make a big change in doing that in Budget 2026."

Mr Donohoe said that the Central Bank's projection of 32,500 homes being built this year "was about right".

Answering questions earlier on Newstalk, Mr Donohoe said that there would be three changes within the tax system.

“Firstly, we will be making further changes with regard to carbon taxation. Secondly, the rate of PRSI within our economy will be going up to help fund our auto-involvement system and better pensions in the future.

"Finally, the tax package that we will be bringing forward is created by the kind of income growth that we are seeing taking place within our economy."