‘The Government’s forceful and timely policy responses have helped ensure the continued resilience of the economy in the face of a succession of major external shocks. Encouragingly, inflation is now back at rates consistent with price stability and the economy continues to operate at full employment. However, while the economy is in reasonably good shape at present the external outlook remains highly uncertain with elevated geopolitical tensions’.

“In terms of the public finances, at the headline level, our public finances are performing well and budgetary surpluses are in prospect over the coming years. However, the headline fiscal position masks the underlying vulnerabilities present in our public finances, the most significant of which is the exposure to volatile corporation tax receipts.

“The two new investment vehicles – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund – signed into law last month will help us to address some of the risks around windfall tax revenues, but this must be coupled with a balanced approach to budgetary policy.

“There remains the continuing need to improve public services and infrastructure, particularly in the context of a growing population and economy. The Government has adapted its fiscal strategy to take account of this, to support the continued delivery of better healthcare services as well as accommodate higher capital spending. On this basis, an overall package of €8.3 billion is being made available, consistent with expenditure growth of 6.9 per cent.

“It is important to stress that in the provision of additional public services, additional financial resources must go hand-in-hand with mechanisms that improve public service delivery. Value-for-money considerations must be to the fore and an increased focus on efficiency and productivity is needed.

“On the taxation side, a package of €1.4 billion has been allocated which will ensure that Government has the scope to once again adjust tax credits and bands to ensure workers do not find themselves paying a higher rate of tax because of higher wages.

“I strongly believe that the strategy that we have announced represents an approach that takes into account the economic realities of today while still ensuring the sustainability of the public finances into the future. There are many challenges on the horizon but there are also opportunities. It is crucial that we use the current window of opportunity presented by the relative health of our economy and public finances to seize them.

‘Today’s publication of the Summer Economic Statement demonstrates this Government’s ongoing commitment to providing for high quality public services and better societal outcomes in a manner consistent with a fiscally sustainable expenditure strategy’.

“The budgetary approach taken in recent years has ensured that we could continue to build on and improve day to day public services and key infrastructure requirements whilst also responding to external shocks, such as the global pandemic and the spike in inflation, in order to minimise the fall-out for households and businesses. This response successfully balanced the need to address continuing expenditure priorities against the risk of adding to inflationary pressures.

“Budget 2025 is being framed in the context of this continued need to further improve public services and infrastructure so that we can support a growing population and growth in our economy.

“The SES sets out an overall expenditure package for Budget 2025 of €105.4 billion, an increase of €6.9 billion over 2024. Of this, €5.1 billion is attributed to the costs of covering Existing Level of Service (ELS) requirements in 2025, which includes the full year cost if the public sector pay agreement of €1.2 billion for 2025, and decisions already taken around capital allocations in the NDP.

“The remaining €1.8 billion will be subject to new measure announcements as part of the Budget 2025 package. On a like for like basis, this is in line with the amounts provided for new current spending measures in 2024.

“In this regard, this expenditure ceiling set out in the SES for 2025 will facilitate a budget that can:

“A key element of the overall expenditure amount for 2025 is agreement in relation to the level of Health funding for 2025. Taking into account demands for better quality health care, the complexity of providing health services, the legacy impact of a post pandemic and heightened inflationary environment, significant additional funding is being provided for the department of Health.

“Following significant engagement, I and my officials, have reached an agreement with the Department of Health and the HSE which will provide for an additional €1.5 billion for the Health sector in 2024. In addition, I have also agreed that a further €1.2 billion will be allocated in 2025 for existing level of service costs. As part of this arrangement, the three parties have agreed that this additional funding provides an opportunity to strengthen financial planning and governance within the HSE - recognising the importance of demonstrating a clear link between the significant level of public funding being made available and how this translates into the delivery of improved healthcare outputs and better health outcomes.

“The National Development Plan is central to delivering the vital infrastructure needed to support our future economic and social progress. Capital expenditure has been prioritised in recent years, as shown by the additional €2.25 billion (over 2024 to 2026) agreed last year, all of which has been allocated to the NDP. For 2025, overall capital investment will increase by €1.4 billion (or 10.6%) to €14.5 billion in 2025.

“Current funding will increase by 6.4% over 2024, or €5.5 billion. This is a significant investment in services to meet a population base that we expected to only achieve at the end of the decade.

“Finally, the parameters set out for Budget 2025 as published in today’s SES provide for a level of increased expenditure growth which will deliver significant outputs and outcomes for the country. This level of investment will cover a range of policy areas and public services including;