The government’s Mid-Year Expenditure Report 2022 is forecasting an increase in state expenditure of 6% in 2022 and 6.5% in 2023.

The document makes clear that the overall parameters for Budget 2023 provide for a total package of €6.7bn, with just over €1bn for tax measures and almost €5.7bn for expenditure measures over 2022 and 2023.

The MYER details what the government calls ‘cost of living measures’ which were not anticipated when Budget 2022 was formulated. These measures have a total estimated cost for 2022 of €1,330m, and include:

Transport
Haulier Payment of €100 per HGV per week – €18m
Public Transport 20% Reduction – €54m

Taxation
Excise Duty reduction -  €417m
VAT reduction on electricity and gas – €46m
Extension of 9% VAT rate for the hospitality sector - €250m

In Association with

Energy
€200 Electricity Credit – €378m
Fuel Allowance Lump Sum Payments – €86m

Family/Child
School Transport, Hot School Meals, Back to School Allowances etc – €78m

Michael McGrath, Minister for Public Expenditure and Reform, commented: "The government’s strategy is to deliver sustainable expenditure growth. In response to the challenging economic context, a short-term increase in the level of expenditure is required to protect public services and respond to the cost of living pressures.

"The government is acutely aware of the cost of living pressures facing households at the present time. Measures introduced in Budget 2022 and earlier this year represent a significant intervention on the part of the government to help households deal with the rising cost of living.

"Overall, this strategy will allow us to continue responding to the challenges facing our economy and society while also supporting continued investment in important public services”.

The minister added: "Budget 2023 will complement the measures already introduced and focus on further cost of living supports with a core expenditure package of €5.7bn, €400m of which will be allocated in 2022 for the early implementation of new measures.

"This will see core gross voted expenditure reaching €85.8bn in 2023. With a further €4.5bn available to continue our response to non-core challenges such as COVID-19, Brexit and providing humanitarian assistance to Ukrainian arrivals to Ireland, total gross voted expenditure will reach €90.3bn next year."

In relation to capital spending, the MYER notes that most government departments are reporting capital underspends, in particular the two largest capital spending sectors of Housing and Transport, which account for over half of total budget.

The review document states: “Capital expenditure tends to be lumpy, with drawdown of expenditure occurring to a greater extent in the fourth quarter of the year. This is reflected in the capital profiles from departments, where just under 29 per cent of the allocated capital was profiled to be spent in the first half of the year, while some 48 per cent is profiled to be spent in the final quarter, including 25 per cent profiled in December.

“2022 has seen a significant level of price inflation to construction materials, supply chain disruption and inflation in the prices of fuel and energy. These pressures have all contributed to delays in the construction of projects.”