The Government has announced a major shift in financial planning with the publication of a five-year spending strategy, setting out projected increases in public expenditure through 2030. The Medium Term Fiscal and Structural Plan outlines an average annual spending rise of 6 percent, with specific ceilings for both current and capital spending.
Under the plan, total expenditure is set to increase by 7.2 percent in 2025. Current spending will grow by 5.8 percent in 2026, while capital investment is expected to jump 15.1 percent as the Government focuses on infrastructure projects. Beyond that, spending increases will gradually decline, with total growth projected at 6.5 percent in 2027, 5.8 percent in 2028, 5.4 percent in 2029, and 5.2 percent in 2030.
John McCarthy, chief economist at the Department of Finance, described the limits as “binding ceilings,” noting that breaches would carry reputational consequences rather than legal penalties.
Finance Minister Simon Harris said the new approach represents a “fundamental change” in how the State manages public finances. “We are determined to stick with this,” he said, emphasizing that medium-term budgeting is designed to prevent the usual “drift” in spending during the year. Harris added that the move follows recommendations from the International Monetary Fund.
Minister for Public Expenditure Jack Chambers highlighted a built-in contingency of €1 billion, which is currently unallocated. He explained that if a department overspends in a given year, the excess will be deducted from its allocation the following year.
The plan, required under European Union law, will be submitted to the European Commission in the New Year and is expected to be formally adopted in March by the Ecofin meeting of EU finance ministers.
The publication comes after criticism over delays. The Government had initially promised to release the plan in the summer, and past overspending by previous coalitions has been noted by the Irish Fiscal Advisory Council. The previous Fine Gael, Fianna Fáil, and Green Party government abandoned a 5 percent spending limit after a surge in expenditure following the Covid-19 pandemic.
Already, Coalition spending for 2025 stands €4 billion, or 8 percent, above the commitments made in last October’s Budget, highlighting the challenges the Government faces in adhering to new fiscal ceilings.
The plan signals a renewed commitment to medium-term fiscal discipline while allowing for targeted investment, particularly in infrastructure, over the next five years. By setting clear spending limits and contingency measures, the Government aims to ensure greater predictability in public finances and reduce the risk of unplanned overspending.
