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.

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.”

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.

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.”

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.