Irish economy returns to growth

The Republic of Ireland’s domestic economy returned to growth in the first quarter of 2024, official data suggests.

Output, as measured by Modified Domestic Demand (MDD) expanded by 1.4% compared to the final quarter of 2023.

The state’s finances also continue to be boosted by a corporation tax windfall.

Corporation tax income was up by 30% year-on-year in May to 3.6bn euro, reversing a slowdown earlier in the year.

Ireland has benefited from reforms to tax rules which means major companies pay much of their global tax in the country.

Ireland is in the unusual position of being able to run budget surpluses due to these revenues.

The government has begun the process of setting up a sovereign wealth fund using some of the tax windfall.

Minister for Finance, Michael McGrath, said: “Overall corporate tax revenues have recovered after a sharp drop in the first quarter of the year and are now level with the same period last year.”

He again cautioned that these revenues are “volatile” and “we cannot necessarily rely on some of these receipts into the future.”

He is expected to set out the broad tax and spending parameters for the country’s next budget in the coming weeks.

An independent budget watchdog, the Irish Fiscal Advisory Council (Ifac) has warned the minister not to plan an “everything now” budget.

It said that tax cuts and spending increases could overheat the economy which is already “operating at or above capacity.”

“The jobs market is tight, with record high employment and record low unemployment. Inflation is falling, but underlying measure remain high,” it added.