Irish Government debt will stand at close to a quarter of a trillion euro by the end of the year, Paschal Donohoe said yesterday as senior Ministers signalled that spending could not remain at current levels.

Taoiseach Micheál Martin said the Government had spent about €38 billion on necessary and appropriate supports during the pandemic but that this was "not sustainable".

Speaking at the National Economic Dialogue on Monday, Mr Martin, along with the Minister for Finance, and Minister for Public Expenditure Michael McGrath, indicated that Government spending could not continue as it had been during the pandemic.

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The Taoiseach said “we must now move to the next phase, in which the finite resources that Government can deploy are targeted at those who need them most, and used in a way that best supports recovery and our future prosperity”.

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“While we will be ambitious in our plans and in what we want to achieve, we must be mature enough as a society to recognise that there are trade-offs, that not everything can be achieved overnight, and that for so many of the challenges we face, there are no easy, quick answers or solutions.”

Challenging headwinds

In the coming months and years “we face challenging headwinds” from the fallout of the pandemic and Brexit or the ongoing talks on international taxation, he told employers, trade unions and social campaigners gathered to discuss priorities ahead in preparation for the budget.

Mr Donohoe said: “Put simply, we cannot continue to run a strongly expansionary budgetary policy while growth accelerates.”

Michael McGrath separately warned last night that there were more reasons to expect that supportive policies of the European Commission and European Central Bank – which facilitated additional Government spending during the Covid-19 crisis – would change rather than stay the same. In a report on the operation of financial emergency legislation, he said "domestic policy must be conscious of this".

Mr McGrath also said the actual fall-off in corporation tax receipts to the exchequer in the years ahead could be “far greater” than the €2 billion reduction projected by 2025 on foot of international efforts to reform this area.