Ireland faces mounting financial pressures in the coming decades due to an ageing population and the growing costs of climate change, according to a new report by the Irish Fiscal Advisory Council (IFAC).
The report, titled “Boston or Berlin? How does Ireland’s tax and spending compare?”, outlines how Ireland currently appears to be a low-tax, low-spending country compared to other high-income European nations. However, the report argues this perception is largely shaped by Ireland’s demographic and economic advantages—specifically, a relatively young population and strong economic growth.
“Right now, we spend less on healthcare and pensions because of our youthful population,” said Niall Conroy, author of the report. “But as our population ages, those costs will rise significantly.”
Healthcare spending in particular is flagged as an area where Ireland already exceeds many European peers. As the population ages, those costs are projected to grow even more, potentially making Ireland an outlier in terms of health expenditure relative to its size and tax base.
The report also finds that Ireland collects less government revenue than most other high-income European countries. When volatile corporate tax receipts are stripped out, Irish government revenue is about €4,700 per person lower than the European average. This revenue gap is largely attributed to lower social insurance contributions from both employees and employers.
Despite this, Ireland continues to benefit from unusually high levels of corporation tax, buoyed by the presence of major multinational companies. But the report cautions against overreliance on this source, noting its unpredictable nature and vulnerability to global tax reforms.
While recent government initiatives to set up long-term savings funds are seen as positive steps, IFAC warns they will not be sufficient to fully meet future spending demands. The Council urges the government to begin planning now by either increasing revenue or reallocating existing spending.
“The more we save today, the less painful the necessary fiscal adjustments will be in the decades ahead,” the report concludes.
The analysis comes as the government prepares for Budget 2026 amid rising debate over how to future-proof the country’s finances in light of demographic shifts, healthcare needs, and climate transition costs.
