Press release
Minister McGrath submits Ireland’s 2024 Budget to Brussels and notes analytical work on longer-range economic projections
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Published on
Last updated on
The Minister for Finance Michael McGrath today (Friday) formally transmitted Ireland’s Draft Budgetary Plan (DBP) for 2024 to the European Commission and Eurogroup, in line with Ireland’s obligations as a euro area Member State.
The DBP is consistent with Budget 2024, presented to Dáil Éireann on 10 October 2023.
Separately, the Minister noted the publication of analytical work, produced jointly by his department and the International Monetary Fund, which examines Ireland’s longer-term economic growth potential over the period to 2050.
A longer-term horizon for macroeconomic forecasts is key to understanding some of the transformative economic issues that will shape policy decisions in the coming decades. These growth projections are an important part of economic planning, and can help inform policy decisions.
The findings suggest a moderation in the pace of economic growth, as measured by GNI*, from the second half of this decade. Growth is projected to average around 2½ per cent in the second half of this decade, slowing to around 1¼ per cent per year on average from 2030 to 2050, and converging to just 1 per cent by 2050. The expected slowdown is linked to several factors such as increased demographic headwinds stemming from a rapidly ageing population.
Commenting on the DBP and the analytical work, Minister McGrath said:
“All euro area Member States transmit their budgetary plans to the European authorities each year, in accordance with their obligations as members of the single currency.
“Our Budget involves support for households and businesses while, at the same time, establishing longer-terms savings vehicles to address structural challenges such as an ageing population.
“Separately, analysis published today by my department shows that the growth rate is set to slow over the medium and longer-term, driven by demographic changes. Other fundamental changes are also underway – the need to decarbonise our economy, the need to meet the digitisation challenge, to name just two.
“We must plan for this now and the establishment of the Future Ireland Fund, and the Infrastructure, Climate and Nature Fund, as announced in the Budget on Tuesday, are important policy instruments that will help current and future generations address these fundamental changes.”
Regulation (EU) 473/2013 of the European Parliament and of the Council (part of the so-called ‘two-pack’) introduces a common budgetary timeline for euro area Member States. Specifically, Draft Budgetary Plans for the forthcoming year must be submitted to the European Commission and to the Eurogroup between 1-15 October each year.
The specification of the content of the Draft Budgetary Plans is set out in a ‘code-of-conduct’ agreed by the Member States in 2011; the requirements are set in GDP terms rather than bespoke measures such as GNI* or modified domestic demand.
A variety of high-growth and low-growth scenarios are also considered in the analytical paper. These show that average annual long-run economic growth (2030-2050) could range from just over ½ per cent in a low-growth scenario to over 2½ per cent in a high-growth scenario.