Economics

Tax increases or spending cuts could be ahead, budgetary watchdog warns

Policymakers face ‘delicate balance’ of managing inflation, protecting poorer households and delivering on longer-term policies

The government faces tough choices in October’s budget, according to the IFAC. Above: Minister for Public Expenditure and Reform Michael McGrath and Minister for Finance Paschal Donohoe. Picture: Sasko Lazarov/RollingNews.ie

The government could be forced to increase taxes or cut expenditure elsewhere in the economy if it chooses to introduce additional permanent measures to ease the cost- of-living crisis, the budgetary watchdog has warned.

In its latest update on the Irish economy, the Irish Fiscal Advisory Council (IFAC) said policymakers faced a “delicate balancing act” of managing high inflation, protecting poorer households and delivering on longer-term policies.

The warning comes against what the council described ...