The government is starting to run out of cash with the Central Bank warning it has reached "the limit of sustainable spending".

The Coalition pledged in its Summer Economic Statement last week it would spend an extra €5.65bn on cost-of-living measures, buttressed by €1.05bn in tax cuts.

But as the government struggles to calm public fears on the rising cost of fuel, food, housing and childcare, unease is growing both in government and the spending watchdog, with the Central Bank saying the spending is being funded by an unsustainable rise in corporation tax receipts.

Unease is especially high that this may yet evolve into a latter-day equivalent of the stamp duty bubble during the Celtic Tiger era which collapsed in 2009 leaving a €3bn gap in the public finances.

One Central Bank source said: "There has to be concerns about the scale of the increase, where in 2017 the full take for a year of corporation tax was €8.2bn and for the first six months of this year it was €8.8bn."

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The senior source noted: "On one level this is good news. Corporation tax cushioned the response to coronavirus." But they warned: "The increase is out of line with normal regular growth. It doesn't match employment or domestic activity and when tax is growing above these indicators, we need to be worried."

Concern is also high that the Exchequer could face an €8bn black hole if corporation tax growth is a bubble. A political source warned: "If it is a bubble and it bursts there's an €8bn black hole. This government won't last too long if we have to fill that."

A Central Bank source confirmed: "If corporation tax grew at normal rates it would be €8bn below the predicted take of €15.3bn. An even more worrying feature of the current rise is that it is very highly concentrated with ten firms. It is similar to the stamp duty issue in the 2000s."

When stamp duty disappeared, they noted: "We lost the revenue but kept the built-in spending, so that was a problem." One of the consequences of the collapse in stamp duty was the introduction of the USC tax and an attempt to introduce water charges.

One nervous minister warned: "If the corporation tax bubble bursts it will have to be replaced. There will be a raft of taxes and charges." A Central Bank source confirmed: "There is a risk there. In the short term it is more likely to go up but in the long run we should start by running a surplus or a rainy-day fund. This is windfall revenue."

One source warned: "The scale of the current increase is so strong it is hard to have a high degree of confidence in its sustainability for the next number of years. We are not in control of this revenue. That's revenue on profits across the globe. If there is a world recession, if there was to be a shock in America and China, there is a risk. It is really tricky."

"We know there is a need to help households, but it has to be done without throwing fuel into the fire. Trying to balance increases in capital spending of 13% with inflation and bottlenecks is demanding. You need to be careful we don't overheat."

The warnings come against a backdrop of growing cabinet concern on the issue of Ireland's indebtedness. Public sector debt is almost at €250bn and among the highest in the developed world on a per capita basis.

Responding to Sinn Féin's call for an emergency budget, junior finance minister Seán Fleming, noted that when it came to Covid 19, "the bovernment acted swiftly and decisively, deploying all the financial firepower necessary to protect households and the wider economy but our fiscal resources were emptied as a result. Since the start of 2020, we have run deficits of almost €30bn overall".