ESRI warns Irish government must curb reliance on windfall tax surplus

The Economic and Social Research Institute cautioned that the Irish coalition’s fiscal strategy lacks prudence because it relies heavily on a corporate tax windfall that accounts for about half of the €33 billion revenue pool. The think tank warned that the proposed €8.5 billion budget, although projecting a surplus, would quickly become a substantial deficit once the windfall fades, contradicting sound fiscal management.

Alan Barrett, an ESRI research professor, argued that the government should adjust its spending base each year rather than adding overruns to the original plan. He also pointed to rising global bond yields as a reason to increase savings. While the institute acknowledges steady economic growth, low unemployment, and rising household consumption, it flags persistent inflation, housing supply shortfalls, and exposure to energy price shocks and rapid AI investment roll-outs as risks.