Submission to Budgetary Oversight Committee

External event contribution

Date and time

15 May 2019

Executive summary

  • Overall, there is little evidence the economy was overheating in 2018. In this context, our view is that the structural balance was marginally in surplus in 2018 with a plausible range of 0.0% to 1.0% of potential output.
  • The economy is likely to be overheating by the end of 2019 in the absence of a negative external shock such as a disorderly Brexit.
  • Baseline average potential output growth of 4.5% is feasible over the 2020s. This sets a baseline for sustainable average annual nominal increases in public spending net of discretionary revenue measures.
  • Ireland’s per capita public spending and government revenue is below average compared to ‘peer’ high-income EU countries.
  • Given increasing demand pressures, Ireland’s position in the economic cycle, and the negative implications for inclusive growth and public services, it is our view that a package of discretionary revenue measures that reduces net government revenue would be an unwise course of action for Budget 2020.

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