Ireland has experienced a budget surplus over the past four years (2019 - 2023), with the government running a record budget surplus of €8 billion in 2022. This follows two years of successive deficits (-€6.8 billion in 2021 and -€18.7 billion).
The increase in spending was “mainly due to increased compensation of employees and intermediate consumption, with reductions in the level of subsidies in the year”. The budgetary largesse is entirely driven by windfall corporate tax receipts, which generated €22.6 billion last year (2022) and are expected to generate €24 billion this year. This is approximately €5,000 for every man, woman, and child in the country.
The government's budget surplus or general government balance is expected to be almost double that at €10 billion this year.
The surplus is predicted to continue, with the Republic of Ireland predicted to have a €65.2bn budget surplus by 2027. In its latest Stability Programme Update, the Department of Finance projected a budget surplus of €10 billion for this year, rising to €16 billion in 2024, on the back of a further surge in corporate tax. Ireland’s general government budget balance registered a surplus of 1.6% of GDP in 2022, and in 2023 and 2024, government budget surpluses are forecast to widen to 1.7% and 2.2% of GDP, respectively.
The surplus is largely due to the windfall corporate tax receipts, which have been generated by the activity of multinational companies. The rebound in private consumption and the continued solid performance of net exports have also contributed to the surplus. Private consumption, a stable driver of domestic growth, is expected to remain solid thanks to increasing household income and employment. While retail sales and services grew only mildly in early 2023, consumer sentiment in Ireland appears resilient to cost-of-living pressures. The high savings rate is expected to decrease gradually but remain far above the historical average.