Budget 2025: Paschal Donohoe dampens hopes of huge cost of living package
The Public Expenditure Minister warned that falling levels of inflation will impact decisions the Government makes ahead of Budget 2025 on October 1
Public Expenditure Minister Paschal Donohoe appears to have attempted to quell expectations of a massive cost of living giveaway as part of Budget 2025.
He warned that falling levels of inflation will impact decisions the Government makes ahead of Budget 2025 on October 1.
Taoiseach Simon Harris promised earlier this week there would be a cost of living package unveiled and that its impacts would be felt before the end of 2024.
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Speaking in Government Buildings on Thursday, however, Minister Donohoe appeared to warn that it may not be as big as the packages unveiled during previous budgets.
He also stated that the measures will have to come out of the €8.4bn assigned to Budget 2025 as part of the Summer Economic statement. Some €1.4bn of this will be allocated to tax measures.
“Any cost of living measures for 2025 that are going to be implemented in 2025 do have to come out with the figures that were outlined in the Summer Economic Statement,” he explained.
“A consequence of the new budget rules that we are in through the European Union is we have to outline overall government expenditure now, with all figures made out clearly for 2025 and beyond.
“Any cost of living measures for 2025 will have to be accommodated within that framework.
“In terms of will there be a cost of living package for Budget 2025, there has been over the last two years.
“While we are seeing inflation really, really decrease, prices have still gone up.
“Yes, we will continue to help with cost of living measures and continue to help with the impact of the cost of living.
“But because inflation has come down so quickly, it will have an impact then on the nature of the cost of living measures that we announced on budget day.”
Asked by the Irish Mirror if it would be correct to predict that this year’s cost of living package will not be as generous as packages announced during previous budgets, Mr Donohoe noted that inflation has fallen from 10 per cent to two per cent.
“An awful lot of the cost of living measures that we’ve announced in previous years were paid for within the calendar year within which the budget was done,” he continued.
“That is why the Taoiseach is correct to say that we do have the ability to do cost of living measures.
“But we will have to pay for and account for them within 2024.
“Regarding their scale, as myself and the Minister for Finance [Jack Chambers] and the Taoiseach said, the scale of what those measures are going to be all has to be decided between the three parties, and we will do that at the end of September.
“I’m making the point, though, that because we’re now within an economy in which inflation is about 2% and not 10%, of course, that will influence the decisions that we will make.
“But we have yet to make those decisions.”
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