Government records €1.8bn surplus in first quarter of 2023

The Government recorded a surplus of €1.8 billion in the first quarter of this year as its total revenue surged year-on-year, new figures from the Central Statistics Office (CSO) show.

Total general government revenue increased 13 per cent to €27.7 billion in the period, up €3.3 billion on the first quarter of 2022. Total general government expenditure was only €1.1 billion higher than it had been in the first quarter of 2022, rising to €25.9 billion. The resulting general government surplus of €1.8 billion compares to a deficit of €400 million in the first quarter of 2022.

On the revenue side the main drivers were an increase in tax revenues of €2.4 billion and an additional €600 million in social contributions. Expenditure rose mainly as a result of increases in other current transfers of €800 million and social benefits of €400 million. Taxes and social contributions, which make up 94 per cent of general government revenue, continued to perform strongly in the quarter, the CSO said, accounting for just under €3 billion of the €3.3 billion increase in revenue.

Direct taxes – mostly corporation tax and income tax – were €2.1 billion higher, while indirect taxes increased by €300 million.

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The CSO noted that a direct comparison of expenditure data in 2023 with 2022 is difficult as a result of Covid-19 support measures in place in 2022 that have since closed. There was a large reduction in expenditure on subsidies, which decreased by €600 million, due to the closure of the Employment Wage Subsidy Scheme, which closed in the third quarter of last year.

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Compensation of employees at €7.2 billion in the first quarter of this year was almost €300 million higher than the same quarter of 2022, when it was €6.9 billion.

Gross general government debt decreased by €1.1 billion in the quarter to €223.6 billion. This was accounted for almost entirely by a movement in debt securities.

Net investment into small savings schemes, predominantly by households, continued during the first quarter of 2023 as the State’s liability from these schemes grew by a further €134 million. This represents a quarter-on-quarter rise of €59 million in the level of quarterly investment into these savings products, although it was €173 million lower than the level seen in the same quarter in 2022.

The general government gross debt to GDP ratio was 43.5 per cent at the end of the first quarter of this year, a decrease of 0.9 percentage points from the end of the fourth quarter of 2022. This reduction in the ratio was again largely driven by the increase in Gross Domestic Product (GDP). Over that same time frame the general government net debt to GDP ratio moved from 36.7 per cent to 35 per cent.

The Government ran a record budget surplus of €8 billion last year as strong tax revenues offset the additional spending on Covid and energy-related supports.