Some Government departments will be permitted to breach their spending ceilings this year despite previous insistence by ministers that no supplementary budgets would be allowed.

As officials prepare to send an updated statement of Ireland's fiscal position to the European Commission next week, departments are preparing briefings on spending pressures and pressing budgetary issues for any incoming government.

The statement, known as the Stability Programme Update, is an annual filing to the European authorities in which the government adopts a new economic forecast and sets out the opening fiscal position for the budget process.

It also contains the first official forecast for economic growth in 2017.

Next week’s Stability Programme Update is likely to see some easing of the October budget’s forecast that ministers would have only €500 million of “fiscal space” for tax cuts and new spending increases. However, sources say the budgetary position will remain extremely tight.

New position

Significantly, however, sources say the position previously adopted by Government Ministers — that no extra money can be allocated this year in supplementary estimates — is unlikely to be universally maintained.

Ministers had insisted that European rules in the Stability and Growth Pact made it impossible to have further supplementary estimates at the end of this year, as had become the practice for departments which exceeded their budgets in recent years.

However, with a huge overspending again emerging in the health service and growing pressures on pay across the public sector, senior political and official sources say some easing of the “no supplementary” rule will be inevitable.

Officials may begin discussions with the European Commission when they present the Stability Programme Update to Brussels next week.

“Of course there will be some scope,” said one high-ranking source. “The Government’s budget is €55 billion – you can’t land exactly on the number every year. The commission realises that.”

“The rules are complex and somewhat ambiguous,” the source said.

Cutbacks in health

Many sources stressed it was not possible to introduce cutbacks in health in the second half of the year while the State’s finances were running ahead of targets on tax revenues.

However, all warned about the disintegration of budgetary discipline across Government. The health service remains an enduring problem, with sources suggesting the expected overspend of this year’s allocated budget was likely to be at least as big as last year’s €600 million.

Meanwhile, unions across the public sector are agitating for pay increases. In recent weeks teachers and gardaí have threatened to strike, while the next government is also likely to face pressure to signal investment in housing and homeless services.

Sources say it will be politically impossible to introduce cuts in the health service – to ensure it stays within budget – as one of its first acts.

The admission comes as the tight fiscal situation facing the next government — exacerbated by the long interregnum and a long list of election promises — becomes clearer.