Coalition leaders insist ‘balanced approach’ to Budget will not fuel inflation

The leaders of Ireland’s coalition Government have insisted Tuesday’s Budget will not further fuel inflation.

Tax cuts and child-related supports are among the key measures to be unveiled in Budget 2025 amid the prospect of a winter general election in Ireland.

The Fine Gael, Fianna Fail and the Green Party government is to unveil 8.3 billion euros worth of measures in the last of the coalition’s five financial packages.

Taoiseach Simon Harris said the Government had taken a “balanced approach” as he dismissed claims that he was trying to buy votes ahead of the election.

Mr Harris said: “I make no apology, none whatsoever, for giving people a little bit of their own money back between now and Christmas, because that’s the buffer we need to provide people to allow the timeline between inflation falling and bills falling.”

Budget 2025, to be officially unveiled on Tuesday, is expected to include changes to income tax thresholds, a cut to the Universal Social Charge (USC), and an increase to the 750 euro renters’ tax credit.

The Government will also announce a cost-of-living package including punter-friendly energy credits and two double child benefit payments.

Pressed on whether the giveaways in the Budget risked overheating the economy, Fianna Fail leader and deputy premier Micheal Martin said: “I don’t think the Budget in itself would be a significant fueller of inflation.

“We have to keep all of those issues under review, obviously, over the next 12 months – but the economy right now is in a healthy space.”

A “baby boost” payment of 420 euros – suggested by Green Party leader and Children’s Minister Roderic O’Gorman to help parents with the costs of a newborn baby – has also been approved, along with a 15 euro increase in maternity and paternity benefit.

Mr O’Gorman told reporters on Tuesday that the Budget meets “requirements in terms of supporting parents, children and families and supporting the planet”.

A disagreement on the scale of welfare payment increases surfaced in the media over the weekend, where it was reported Fine Gael was seeking a 15-euro increase to pensions alongside a lower hike for the jobseekers’ allowance.

Mr Harris had said publicly that it did not make sense to spend significantly more on jobseekers’ allowance at a time when the economy is at near full employment, while Mr Martin said the 12-euro hike had been “stitched in” for months.

Public Expenditure Minister Paschal Donohoe said it was understandable that different views had been aired: “The critical thing is this Budget has been delivered collegiately, constructively and bears all the hallmarks of an administration that has been stable.”

Among the other notable measures included in the budget are free hormone replacement therapy from January, which could save women between 360 and 840 euros a year, and funding for 400 new staff and digital investment at the International Protection Office.

The Government is also expected to outline how 14.1 billion euros in Apple tax revenues should be spent, which Ireland received after losing a long-running state aid case against the European Commission in September.

Eight billion of the Apple tax revenue is expected to be received this year, contributing to Ireland’s total surplus of 25 billion euros in 2024, fuelled by multinationals’ corporation taxes.

The Government has stressed that the Apple tax windfall and other surpluses will not affect the amount spent in Budget 2025.

The country’s fiscal watchdog has urged politicians not to repeat past mistakes, arguing that before the recession Ireland’s booming economy was exposed as vulnerable by overly relying on one sector.

But rumours of an election before Christmas, fuelled by flattering poll numbers for Fine Gael since Mr Harris took over as leader in April – who has the ultimate call on when to go to the polls, have raised accusations of a “giveaway” budget.

A general election must be held by March 22 at the latest and although many senior government ministers insist the coalition will go “full term”, there has been little clarity on what that means.

The Budget is to be announced by Finance Minister Jack Chambers, followed by Mr Donohoe, in the Dail Parliament chamber from 1pm on Tuesday.