National Economic Dialogue 2024 – A more shock-prone world: challenges and opportunities for Ireland

27th May, 2024

Check Against Delivery

Good morning everyone, and welcome.

The National Economic Dialogue is an important event in our budgetary calendar. I would like to thank you for your participation here today, as we take time to reflect on our economic and social context and on the choices and opportunities before us.

I would like to invite you all to contribute to the discussion, to share the perspectives and ambitions of the groups and organisations you represent, so thattogether we can shape our long-term vision for Ireland.

The announcements we make on budget day are not just the result of discussions and decisions made in the preceding weeks. They are the result of an ongoing process grounded in three things:

1. shared priorities
2. a solid evidence base
3. a unified vision of Ireland’s future

Your contributions here today are an invaluable part of informing that process, and shaping our long-term vision.

A More Shock-Prone World

The theme of this year’s National Economic Dialogue, “A more shock-prone world – challenges and opportunities for Ireland” reflects the unique historic context we find ourselves in, and highlights the importance of continuing to adapt and strengthen our economic resilience.

We are navigating a global landscape in flux, marked by heightened geopolitical tensions and conflict, growing economic nationalism, and reconfigured global supply chains.

These rapid shifts, intertwined with a series of unprecedented global crises, highlight the vulnerability of our interconnected world. For Ireland, where we have an economy characterised by a large foreign-owned sector reliant on global trade, the risks that these changes pose are particularly pronounced.

I look forward to discussing with you later today, how we can best navigate these complex challenges,while delivering better outcomes for everyone in Ireland.

Investing in Public Services

The title of my breakout session today is Investing in Public Services – Benchmarking Our Level of Expenditure. This session will explore how our levels of public investment are meeting our socio-economic needs, given our growing population and economy.

The session paper, which provides useful context for the discussion, benchmarks Ireland’s level of public expenditure per capita against other EU Member States, and sets out comparisons in government spending, investment in capital infrastructure, and demographic differences.

During this session, we will explore how we can optimise public spending to enhance service delivery and meet our long-term needs effectively. Your insights, informed by experience, will be particularly valuable in this endeavour.

Expenditure Context

Turning now to how we invest the resources available to us as a country – the central remit of my Department it is worth taking some time to outline the economic context in which we find ourselves.

Keeping in mind the dual challenges of a more shock-prone and unpredictable world on one hand, and the need to maintain consistent improvements and investment in our public services, my colleagues in Government and I have sought to achieve a balance, maintaining our resilience, while also delivering real tangible improvements in the lives of people living in Ireland.

Our expenditure strategy must remain responsive to economic and social developments, while also being fiscally sustainable. This year, over €91.2 billion is available to support core public services and a record investment in infrastructure under our National Development Plan.

This funding supports a range of new measures thatreflect the importance of strategic programmes in Childcare, Health, Education and Social Protection supports. The Government is focused on providing for the needs of a growing and changing population.We are building a society which strives achieve improved outcomes for children and improved living standards for all people in Ireland.

This investment also continues the delivery of a National Development Plan that provides housing, healthcare and schools now and for the future, building capacity in our economy and supporting our climate ambitions. It represents another substantial commitment of resources to support delivery of fit-for-purpose public services and economic development and regional growth.

Since 2020 non-core expenditure, expenditure that is temporary in nature, has facilitated our response to the impact of a range of external pressures. We started with Brexit, then the pandemic, and the outbreak of war in Ukraine was followed swiftly by increased levels of price inflation.

Identifying and separating core and non-core expenditure enabled funding to be provided for specific and temporary purposes, that could bewithdrawn when no longer required.

With inflation retreating faster than expected and the pandemic hopefully in the past too, the carefullyphased withdrawal of these supports is underway. This unwinding is essential to ensuring sustainability of the public finances. In the case of Covid related expenditure, total outlay has fallen from €15.4 billion in 2020 to an estimated €1.3 billion for this year.

While a significant part of the non-core expenditure category has been unwound, risks do remain that have to be managed as best we can. For this reason, we have included a contingency reserve within the overall expenditure ceiling for 2025 to 2027 of €4.5 billion. This will support the continuation of funding accommodation and social supports for people arriving from Ukraine.

Towards Budget 2025

Our careful management of public finances has supported our economy’s resilience. However, a strong economy alone is not enough. We must develop a shared, positive long-term vision that everyone can believe in. Planning for that long-term vision now involves investing in digitalisation, decarbonisation, and infrastructure through the National Development Plan, and enhancing the quality of life through our public services.

In the coming weeks, I will further consider our budgetary and economic position in collaboration with Minister McGrath, in preparation for the 2024 Summer Economic Statement. This will set the expenditure parameters for Budget 2025, based on the latest available data. In setting these parameters, the Government recognises the need for our fiscal strategy to adapt to the evolving nature of our economy and society.

This flexibility was reflected in our budgetary strategy over 2023 and 2024, with additional public expenditure to account for cost-of-living pressures. In finalising our approach, we will ensure a balance – implementing measures that support people to achieve their potential, transitioning towards a greener economy, and protecting the sustainability of public finances for the future.

I look forward to hearing your contributions.

Thank you.