Ireland expects 2024 budget surplus of 2.8% of national income

The finance ministry also estimated that inflation would average 2.1% this year following a sustained recent slowdown and that the domestic economy would expand by 1.9% in 2024 versus the 2.2% it forecast six months ago. Ireland is one of the few European economies taking in more revenue than the government spends each year and it ran budget surpluses of 3.2% and 2.9% of modified gross national income (GNI*) in the last two years, primarily due to a surge in corporate tax paid by its large hub of foreign multinationals.

Ireland is set to deliver a budget surplus of 8.6 billion euros or 2.8% of modified gross national income in 2024, broadly in line with the amount forecast at last October's budget, the finance ministry said on Tuesday. The finance ministry also estimated that inflation would average 2.1% this year following a sustained recent slowdown and that the domestic economy would expand by 1.9% in 2024 versus the 2.2% it forecast six months ago.

Ireland is one of the few European economies taking in more revenue than the government spends each year and it ran budget surpluses of 3.2% and 2.9% of modified gross national income (GNI*) in the last two years, primarily due to a surge in corporate tax paid by its large hub of foreign multinationals. That spurred the government to set up a new sovereign wealth fund to help cut future pension and climate costs. It hopes to grow the fund to around 100 billion euros by 2035 thanks to future expected surpluses.

The finance ministry forecast a surplus of 9.7 billion euros or 3% of GNI* next year, with similar levels pencilled in for the following two years. Irish inflation peaked at almost 10% in mid-2022 and has fallen steadily over the last 12 months to 1.7% last month. The finance ministry expects it to remain steady at an average rate of 2.1% next year and drop a touch to 2% in 2026.

After modified domestic demand - the government's preferred measure of economic activity - slowed by more than expected to just 0.5% last year, the ministry expects it to grow at an average annual rate of 2.25% over the second half of the decade.

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