Dáil Éireann Debate, Thursday - 18 December 2025
368. Deputy Seán Ó Fearghaíl asked the Tánaiste and Minister for Finance the key measures his Department has taken to support and sustain the economy during 2025; his priorities for 2026; and if he will make a statement on the matter. [73577/25]
Amharc ar fhreagra369. Deputy Seán Ó Fearghaíl asked the Tánaiste and Minister for Finance his assessment of the performance of the economy during 2025; the outlook for 2026 and subsequent years; and if he will make a statement on the matter. [73578/25]
Amharc ar fhreagraI propose to take Questions Nos. 368 and 369 together.
Despite trade, geopolitical and other headwinds, incoming data confirms that the Irish economy has continued to perform well in 2025. National Accounts data published by the CSO earlier this month show that in the first three quarters of the year Modified Domestic Demand – a proxy for domestic economic activity – grew by over 4 per cent on an annual basis. Over the same period, consumer spending grew by almost 3 per cent.
Employment reached a record high of over 2.82 million in the third quarter of 2025 with over 30,000 jobs created on an annual basis. However, the pace of growth has eased in recent quarters.
My Department expects growth in the Irish economy to remain relatively solid in 2026. Modified Domestic Demand is expected to grow by 2.3 per cent next year. Strong momentum in consumer spending is projected to continue into 2026 with annual growth of 2.3 per cent also forecast. Employment is projected to expand by 1.5 per cent next year with unemployment expected to remain relatively low and broadly consistent with 'full employment'.
Beyond 2026, the economy and labour market are expected to continue to record solid growth, albeit at a more moderate pace than in recent years.
My Department has worked to support and sustain economic activity through inter alia the introduction of measures announced in Budget 2026. For businesses, these include the enhancement of the Research and Development Tax Credit and Capital Gains Tax Revised Entrepreneur Relief relief, as well as the reduction of the VAT rate to 9 per cent for the hospitality sector. Households will benefit from measures such as the extension of the reduced VAT rate for electricity and gas, with renters benefiting from the extension of the rent tax credit for a further three years.
Government continues to be in a position to support households and businesses because of the prudent management of the public finances. For 2025, we are on track to run a headline budget surplus and have continued to invest in the Future Ireland Fund and Infrastructure, Climate and Nature Fund. The total combined value of these funds will be approximately €17 billion by end-2025.
More generally, Government has been proactive in its response to the more challenging external environment. Indeed, the Government Action Plan on Market Diversification, the Action Plan on Competitiveness and Productivity, as well as the revised National Development Plan will help boost competitiveness and ensure the resilience of our economy over the coming years.
My overarching priority for next year is to continue to deliver on the commitments set out in the Programme for Government. In relation to the economy and public finances, it is essential that we continue to run headline budgetary surpluses, protect jobs, as well as invest ‘windfall’ tax receipts into our long-term savings funds to prepare for future structural costs. In addition, Ireland’s Presidency of the Council of the European Union in the second half of 2026 is a key priority for Government, which offers enormous opportunities for Ireland to show leadership on the European and global stages.
