DAVY VIEW

Yesterday’s Summer Economic Statement flagged an overall package of €8.3bn for Budget 2025 in October. Once again, the government plans to exceed its own spending rule, and this could add to overheating risks. However, the rule has been recalibrated to focus on current spending. We believe that this change is appropriate given significant population growth and infrastructure shortfalls. Furthermore, planned growth in current spending of 6.4% is close to our expectation for nominal economic growth of 6-7% over the coming years. If delivered efficiently, capital spending increases of 10.6% next year and 11.2% in 2026 will help to alleviate supply bottlenecks in the Irish economy.