NERI Research inBrief - Public spending levels: How does Ireland Compare?
AuthorsTom McDonnell and Paul Goldrick-Kelly
GDP based comparisons of public spending are problematic for Ireland as GDP overestimates Irish fiscal capacity. GNP and even the CSO’s new modified GNI (GNI*) indicator are also problematic as there is some fiscal capacity not captured within these aggregates.
It may be more relevant to compare levels of public spending in different countries on a per capita basis. A meaningful comparison on this basis can only be with similar high income countries. Per capita primary public spending in Ireland was 2nd lowest (€14,502) within the EU’s group of 11 rich ‘peer countries’ in 2016 and 84.7% of the group’s population weighted average.
A caveat is that peer countries have different demographic profiles. Ireland’s relatively young population means spending pressures are higher for education and child supports but lower in areas like pensions or healthcare. Ireland spends significantly less on education on a per pupil basis. There is also a significant per capita underspend on public R&D.