Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Ireland and delivering a Council opinion on the 2023 Stability Programme of Ireland
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Ireland, circular economy, economic recovery, economic reform, energy policy, fiscal policy, investment, stability pact, stability programme, waste management

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   EUROPEAN COMMISSION  Brussels, 24.5.2023  COM(2023) 607 final  Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Ireland and delivering a Council opinion on the 2023 Stability Programme of Ireland {SWD(2023) 607 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2023 National Reform Programme of Ireland and delivering a Council opinion on 
the 2023 Stability Programme of Ireland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investments,  entailing  a  fiscal  impulse 
financed  by  the  EU.  In  line  with  the  European  Semester  priorities,  it  contributes  to 
economic  and  social  recovery  and  to  the  implementation  of  sustainable  reforms  and 
investments,  in  particular  to  promote  the  green  and  digital  transition  and  make  the 
Member States’ economies more resilient. It also helps strengthen public finances and 
boost  growth  and  job  creation  in  the  medium  and  long  term,  improve  territorial 
cohesion  within  the  EU  and  support  the  continued  implementation  of  the  European 
Pillar of Social Rights. The maximum financial contribution per Member State under 
the Recovery and Resilience Facility was updated on 30 June 2022, in accordance with 
Article 11(2) of Regulation (EU) 2021/241.  

(2) 

On 22 November 2022, the Commission adopted the 2023 Annual Sustainable Growth 
Survey3,  marking  the  start  of  the  2023  European  Semester  for  economic  policy 
coordination. The European Council endorsed the priorities of the  survey  around the 

1 
2 

3 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 
COM(2022) 780 final. 

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four  dimensions  of  competitive  sustainability  on  23  March  2023.  On  22  November 
2022,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted 
the  2023  Alert  Mechanism  Report,  in  which  it  did  not  identify  Ireland  as  one  of  the 
Member States that may be affected or may be at risk of being affected by imbalances, 
and for which an in-depth review would be needed. On the same date, the Commission 
also adopted an opinion on Ireland’s 2023 draft budgetary plan. The Commission also 
adopted a recommendation for a Council recommendation on the economic policy of 
the euro area, which the Council adopted on 16 May 2023, as well as the proposal for 
the 2023 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  the 
Council adopted on 13 March 2023.  

(3)  While the EU economies are showing remarkable resilience, the  geopolitical  context 
continues  to  have  a  negative  impact.  As  the  EU  stands  firmly  with  Ukraine,  the  EU 
economic  and  social  policy  agenda  is  focused  on  reducing  the  negative  impact  of 
energy shocks on both vulnerable households and companies in the short term, and on 
keeping  up  efforts  to  deliver  on  the  green  and  digital  transition,  support  sustainable 
and inclusive growth, safeguard macroeconomic stability and increase resilience in the 
medium  term.  It  also  focuses  heavily  on  increasing  the  EU’s  competitiveness  and 
productivity. 

(4) 

(5) 

On  1  February  2023,  the  Commission  issued  the  Communication  A  Green  Deal 
Industrial  Plan  for  the  Net-Zero  Age4  to  boost  the  competitiveness  of  the  EU’s  net-
zero  industry  and  support  the  fast  transition  to  climate  neutrality.  The  plan 
complements  ongoing  efforts  under  the  European  Green  Deal  and  REPowerEU.  It 
aims to provide a more supportive environment for scaling up the EU’s manufacturing 
capacity  for  the  net-zero  technologies  and  products  required  to  meet  the  EU’s 
ambitious climate targets, as well as ensuring access to relevant critical raw materials, 
including  by  diversifying  sourcing,  properly  exploiting  geological  resources  in 
Member States and maximising the recycling  of raw materials. The plan  is  based on 
four pillars:  a predictable and simplified regulatory  environment,  speeding up access 
to finance, enhancing skills, and open trade for resilient supply chains.  On 16 March 
2023,  the  Commission  also  issued  the  Communication  Long-term  competitiveness  of 
the EU: looking beyond 20305, structured along nine mutually reinforcing drivers with 
the objective to work towards a growth enhancing regulatory framework. It sets policy 
improvements,  well  focused 
priorities  aimed  at  actively  ensuring  structural 
investments and regulatory measures for the long-term competitiveness of the EU and 
its Member States. The recommendations below help address those priorities. 

In 2023, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  Fully 
implementing  the  recovery  and  resilience  plans  remains  essential  for  delivering  the 
policy priorities under the European Semester, as the plans address all or a significant 
subset  of  the  relevant  country-specific  recommendations  issued  in  recent  years.  The 
2019, 2020 and 2022 country-specific recommendations remain equally relevant also 
for  recovery  and  resilience  plans  revised,  updated  or  amended  in  accordance  with 
Articles 14, 18 and 21 of Regulation (EU) 2021/241.  

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COM(2023) 62 final.  
COM(2023) 168 final.  

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(6) 

(7) 

(8) 

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8 

The REPowerEU Regulation6 adopted on 27 February 2023 aims to rapidly phase out 
the  EU’s  dependence  on  Russian  fossil  fuel  imports.  This  will  contribute  towards 
energy security and the diversification of the EU’s energy supply, while increasing the 
uptake of renewables, energy storage capacities and energy efficiency. The Regulation 
enables  Member  States  to  add  a  new  REPowerEU  chapter  to  their  national  recovery 
and  resilience  plans  in  order  to  finance  key  reforms  and  investments  that  will  help 
achieve the REPowerEU objectives. They will also help boost the competitiveness of 
the EU’s net-zero industry as outlined in the Green Deal  Industrial Plan for the Net-
Zero Age and address the energy-related country-specific recommendations issued to 
the  Member  States  in  2022  and,  where  applicable,  in  2023.  The  REPowerEU 
Regulation  introduces  a  new  category  of  non-repayable  financial  support,  made 
available  to  Member  States  to  finance  new  energy-related  reforms  and  investments 
under their recovery and resilience plans.  

On 8 March 2023, the Commission adopted a communication providing fiscal policy 
guidance for 2024. It aims to support the preparation of Member States’ stability and 
thereby  strengthen  policy  coordination7.  The 
convergence  programmes  and 
Commission recalled that the general escape clause of the Stability and Growth Pact 
will be deactivated at  the end of 2023.  It  called  for fiscal  policies in  2023-2024 that 
ensure  medium-term  debt  sustainability  as  well  as  raise  potential  growth  in  a 
sustainable manner. Member States were invited to set out in their 2023 stability and 
convergence programmes how their fiscal plans will ensure that the 3% of GDP deficit 
reference value is adhered to as well as plausible and continuous debt reduction, or for 
debt  to  be  kept  at  prudent  levels  in  the  medium  term.  The  Commission  invited 
Member States to phase out national fiscal measures introduced to protect households 
and  firms  from  the  energy  price  shock,  starting  with  the  least  targeted  ones.  It 
indicated that, if support measures needed to be extended because of renewed energy 
price  pressures,  Member  States  should  target  such  measures  much  better  than  in  the 
past  towards  vulnerable  households  and  firms.  The  Commission  proposed  that  the 
fiscal  recommendations would be  quantified and differentiated  and be  formulated on 
the basis of net primary expenditure, as proposed in its Communication on orientations 
for  a  reform  of  the  EU  economic  governance  framework8.  It  recommended  that  all 
Member States should  continue to  protect  nationally  financed investment and ensure 
the  effective  use  of  the  Recovery  and  Resilience  Facility  and  other  EU  funds,  in 
particular  in  light  of  the  green  and  digital  transition  and  resilience  objectives.  The 
Commission  indicated  that  it  will  propose  to  the  Council  to  open  deficit-based 
excessive deficit procedures in spring 2024 on the basis of the outturn data for 2023, in 
line with existing legal provisions. 

On  26  April  2023,  the  Commission  presented  legislative  proposals  to  implement  a 
comprehensive reform of the EU’s economic governance rules. The central objective 
of the proposals is to strengthen public debt sustainability and promote sustainable and 
inclusive growth in all Member States through reforms and investments. The proposals 
aim at providing Member States with more control over the design of their medium-
term plans, while putting in place a more stringent enforcement regime to ensure that 

Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1). 
COM(2023) 141 final. 
COM(2022) 583 final. 

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(9) 

Member  States  deliver  on  the  commitments  undertaken  in  their  medium-term  fiscal-
structural plans. The objective is to conclude the legislative work in 2023. 

On  28  May  2021,  Ireland  submitted  its  national  recovery  and  resilience  plan  to  the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance  with  the  assessment  guidelines  of  Annex  V  to  that  Regulation.  On  8 
September 2021, the Council adopted its Decision on the approval of the assessment 
of  the  recovery  and  resilience  plan  for  Ireland9.  The  release  of  instalments  is 
conditional on a decision by the Commission, taken in accordance with Article 24(5) 
of  Regulation  (EU)  2021/241,  that  Ireland  has  satisfactorily  fulfilled  the  relevant 
milestones  and  targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory 
fulfilment  presupposes  that  the  achievement  of  preceding  milestones  and  targets  has 
not been reversed. 

(10)  On  4  May  2023,  Ireland  submitted  its  2023  National  Reform  Programme  and,  on  2 
May 2023, its 2023 Stability Programme, in line with Article 4(1) of Regulation (EC) 
No  1466/97.  To  take  account  of  their  interlinkages,  the  two  programmes  have  been 
assessed  together.  In  accordance  with  Article  27  of  Regulation  (EU)  2021/241,  the 
2023  National  Reform  Programme  also  reflects  Ireland’s  biannual  reporting  on  the 
progress made in achieving its recovery and resilience plan.  

in 

addressing 

Ireland’s  progress 

(11)  The Commission published the 2023 country report for  Ireland10 on 24 May 2023. It 
assessed 
country-specific 
recommendations adopted by the Council between 2019 and 2022, and took stock of 
Ireland’s  implementation  of the recovery and resilience plan.  Based on this  analysis, 
the  country  report  identified  gaps  with  respect  to  those  challenges  that  are  not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new and emerging challenges. It also assessed Ireland’s progress on implementing the 
European  Pillar  of  Social  Rights  and  on  achieving  the  EU  headline  targets  on 
employment, skills and poverty reduction, as well as progress in  achieving the UN’s 
Sustainable Development Goals.  

relevant 

the 

(12)  Based  on  data  validated  by  Eurostat,11  Ireland’s  general  government  balance  turned 
from  a  deficit  of  1.6%  of  GDP  in  2021  to  a  surplus  of  1.6%  in  2022,  while  general 
government debt fell from 55.4% of GDP at the end of 2021 to 44.7% at the end of 
2022. 

(13)  The  general  government  balance  has  been  impacted  by  the  fiscal  policy  measures 
adopted to mitigate the economic and social impact of the increase in energy prices. In 
2022, such revenue-decreasing measures included a reduction in excise duty on fuels 
and VAT cuts on gas and electricity;  while expenditure measures included payments 
to  all  domestic  electricity  accounts  and  a  range  of  social  transfers.  The  Commission 
estimates  the  net  budgetary  cost  of  these  measures  at  0.5%  of  GDP  in  2022.  The 
general  government  balance  has  also  been  impacted  by  the  budgetary  cost  of 
temporary protection to displaced persons from Ukraine, which is estimated at 0.1% of 

9 

10 
11 

Council Implementing Decision of 8 September 2021 on the approval of the assessment of the recovery 
and resilience plan for Ireland (ST 11046/21; ST 11046/21 ADD 1). 
SWD(2023) 607 final. 
Eurostat-Euro Indicators, 47/2023, 21.4.2023 

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GDP  in  2022.  At  the  same  time,  the  estimated  cost  of  COVID-19  temporary 
emergency measures dropped to 0.7% of GDP in 2022, from 2.8% in 2021. 

(14)  On 18 June 2021, the Council recommended that in 2022 Ireland12 pursue a supportive 
fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and  Resilience 
Facility, and preserve nationally financed investment.  

(15)  According  to  the  Commission  estimates,  the  fiscal  stance13  in  2022  was  broadly 
neutral,  at  - 0.2%  of  GDP,  which  was  appropriate  in  a  context  of  high  inflation.  As 
recommended  by  the  Council,  Ireland  continued  to  support  the  recovery  with 
investments  to  be  financed  by  the  Recovery  and  Resilience  Facility.  Expenditure 
financed by Recovery and Resilience Facility grants and other EU funds amounted to 
0.04%  of  GDP  in  2022  (0.1  %  of  GDP  in  2021).  Nationally  financed  investment 
provided an expansionary  contribution of 0.1 percentage points to the fiscal stance.14 
Ireland  therefore  preserved  nationally  financed  investment,  as  recommended  by  the 
Council.  At  the  same  time,  the  growth  in  nationally  financed  primary  current 
expenditure (net of new revenue measures) provided a broadly neutral contribution of 
-0.2  percentage  points  to  the  fiscal  stance.  Ireland  therefore  sufficiently  limited  the 
growth in nationally financed current expenditure.  

(16)  The macroeconomic  scenario underpinning the budgetary projections in  the Stability 
Programme is realistic in 2023 and cautious thereafter. The government projects real 
GDP  to  grow  by  5.6%  in  2023  and  4.1%  in  2024.  By  comparison,  the  Commission 
2023 spring forecast projects a lower real GDP growth of 5.5% in 2023 and higher of 
5.0% in 2024. The Commission’s comparatively higher growth rate in 2024 is mainly 
due to a more sustained pace of growth in net exports. However, in the case of Ireland 
this variable is subject to large fluctuations as it is driven by a small number of large 
multinational  companies,  which  have  been  commercially  very  successful  in  recent 
years. 

(17) 

In its 2023 Stability Programme, the government expects that the general government 
surplus  will  increase  to  1.8%  of  GDP  in  2023.  The  increase  in  2023  mainly  reflects 
buoyant revenue growth. According to the Programme, the general government debt-
to-GDP ratio is expected to decrease from 44.7% at the end of 2022  to 40.5% at the 
end of 2023. The Commission 2023 spring forecast projects a government surplus of 
1.7%  of  GDP  for  2023.  This  is  in  line  with  the  surplus  projected  in  the  Stability 
Programme.  The  Commission  2023  spring  forecast  projects  a  similar  general 
government debt-to-GDP ratio, of 40.4% at the end of 2023. 

(18)  The government balance in 2023 is expected to continue to be impacted by the fiscal 
measures adopted to mitigate the economic and social impact of the increase in energy 
prices. They consist of measures extended from 2022, in particular a second round of 
two  payments  to  all  domestic  electricity  accounts,  as  well  as  a  new  set  of  social 

12 

13 

14 

Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Ireland, OJ C 304, 29.7.2021, p. 28. 
The  fiscal  stance  is  measured  as  the  change  in  primary  expenditure  (net  of  discretionary  revenue 
measures), excluding Covid-19 crisis-related temporary emergency measures but including expenditure 
financed  by  non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds, 
in 
the Fiscal Statistical Tables.   
Other nationally financed capital expenditure provided a neutral contribution of 0.0 percentage points of 
GDP.  

growth. For  more 

to  medium-term 

see  Box 1 

potential 

relative 

details 

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transfers.  The  cost  of  these  measures  is  partly  offset  by  taxes  on  windfall  profits  of 
energy suppliers, namely a cap on revenues from the production of electricity. Taking 
these  revenues  into  account,  the  net  budgetary  cost  of  the  support  measures  is 
projected  in  the  Commission  2023  spring  forecast  at  0.3%  of  GDP  in  202315.  Most 
measures in 2023 do not appear targeted to the most vulnerable households or firms, 
but  do  preserve  the  price  signal  to  reduce  energy  demand  and  increase  energy 
efficiency.  As  a  result,  the  amount  of  targeted  support  measures,  to  be  taken  into 
account in the assessment of compliance with the fiscal recommendation for 2023, is 
estimated in the Commission 2023 spring forecast at 0.1% of GDP in 2023 (compared 
to  0.2%  of  GDP  in  2022).  The  budgetary  cost  of  temporary  protection  to  displaced 
persons  from  Ukraine  is  projected  to  increase  by  0.1  percentage  point  of  GDP 
compared to 2022. Finally, the 2023 government balance is expected to benefit from 
the phasing out of COVID-19 temporary emergency measures of 0.7% of GDP. 
(19)  On  12  July  2022,  the  Council  recommended16  that  Ireland  take  action  to  ensure  in 
2023 that the growth of nationally financed primary current expenditure is in line with 
an  overall  neutral  policy  stance17,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and to 
people  fleeing  Ukraine.  Ireland  should  stand  ready  to  adjust  current  spending  to  the 
evolving situation. Ireland was also recommended to expand public investment for the 
green  and  digital  transitions,  and  for  energy  security  taking  into  account  the 
REPowerEU  initiative,  including  by  making  use  of  the  Recovery  and  Resilience 
Facility and other Union funds. 

(20) 

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2023  spring  forecast  to  be 
broadly  neutral  (0.2%  of  GDP),  in  a  context  of  high  inflation.  This  follows  broadly 
neutral  fiscal  stance  in  2022  (- 0.2%  of  GDP).  The  growth  in  nationally  financed 
primary  current  expenditure  (net  of  discretionary  revenue  measures)  in  2023  is 
projected to provide a contractionary contribution of 0.3 % of GDP to the fiscal stance. 
This  includes  the  reduced  cost  of  the  targeted  support  measures  to  households  and 
firms most vulnerable to energy price hikes by 0.1% of GDP. This also includes higher 
costs  to  offer  temporary  protection  to  displaced  persons  from  Ukraine  (by  0.1%  of 
GDP).  In  sum,  the  projected  growth  of  nationally  financed  primary  current 
expenditure  is  in  line  with  the  Council  recommendation.  Expenditure  financed  by 
Recovery and Resilience Facility grants and other EU funds is projected to amount to 
0.1% of GDP in 2023, while nationally financed investment is projected to provide a 
neutral contribution to the fiscal stance of 0.0 percentage points18. Therefore,  Ireland 
plans  to  finance  additional  investment  through  the  Recovery  and  Resilience  Facility 
and other EU funds, and it is projected to preserve nationally financed investment.  It 
plans to finance public investment for the green and digital transitions, and for energy 
security,  such  as  facilitating  a  deployment  of  renewables,  as  well  as  enabling  the 
electrification  of  other  technologies,  which  are  partly  funded  by  the  Recovery  and 
Resilience Facility and other EU funds.  

15 

16 

17 

18 

The  figure represents the level of annual budgetary cost of those  measures, including current revenue 
and expenditure as well as – where relevant – capital expenditure measures. 
Council Recommendation on the 2022 National Reform Programme of Ireland and delivering a Council 
opinion on the 2022 Stability Programme of Ireland OJ C 334, 1.9.2022, p. 52.   
Based  on  the  Commission  spring  2023  forecast,  the  medium-term  (10-year  average)  potential  output 
growth of Ireland, which is used to measure the fiscal stance, is estimated at 12.3% in nominal terms. 
Other  nationally  financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.1 percentage points of GDP. 

EN 

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(21)  According to the Stability Programme the general government surplus is expected to 
increase to 2.8% of GDP in 2024. The increase in 2024 mainly reflects the reduction 
of  expenditure  as  temporary  spending  measures  are  discontinued.  The  programme 
expects the general government debt-to-GDP ratio to decrease to 38.2% at the end of 
2024.  Based  on  policy  measures  known  at  the  cut-off  date  of  the  forecast,  the 
Commission  2023  spring  forecast  projects  a  government  surplus  of  2.2%  of  GDP  in 
2024. This is lower than the surplus projected in the programme, mainly due to higher 
expenditure  in  the  Commission  2023  spring  forecast.  The  Commission  2023  spring 
forecast projects a similar general government debt-to-GDP ratio, of 38.3% at the end 
of 2024. 

(22)  The  Stability  Programme  envisages  the  phasing  out  of  all  of  the  energy  support 
measures  in  2024.  The  Commission  also  assumes  the  full  phasing  out  of  energy 
support  measures  in  2024.  This  hinges  upon  the  assumption  of  no  renewed  energy 
price increases.  

(23) 

In  the  programme,  Ireland  plans  to  meet  the  medium-term  budgetary  objective  -  a 
structural  budget  balance  of  -0.5%  of  GDP19  -  in  2023  and  2024  and  to  maintain  it 
throughout the rest of the programme period. Based on the Commission 2023 spring 
forecast, the structural balance is forecast at  a deficit of 0.1% of GDP in 2023 and a 
surplus of 1.0% of GDP in 2024, above the medium-term budgetary objective. 

(24)  Assuming  unchanged  policies,  the  Commission  2023  spring  forecast  projects  net 

nationally financed primary expenditure20 to grow at 1.9% in 2024. 

(25)  According  to  the  programme,  government  investment  is  expected  to  increase  from 
2.0%  of  GDP  in  2023  to  2.1%  in  2024.  The  higher  investment  reflects  higher 
nationally  financed  investment  and  investment  financed  by  the  EU,  namely  through 
the  Recovery  and  Resilience  Facility.  The  programme  refers  to  reforms  and 
investments, that are expected to contribute to fiscal sustainability and sustainable and 
inclusive growth. These include an update of the climate action plan and the building 
of a data centre facility, which are also part of the Recovery and Resilience Plan.  

(26)  The Stability Programme outlines a medium-term fiscal path until 2026. According to 
the  programme,  the  general  government  surplus  is  expected  to  increase  to  2.9%  of 
GDP  in  2025  and  to  3.1%  by  2026.  The  general  government  balance  is  therefore 
planned  to  meet  the  relevant  Treaty  reference  value  over  the  programme  horizon. 
According to the programme, the general government debt-to-GDP ratio is expected to 
decrease from 38.2% at the end of 2024 to 32.0% by the end of 2026. 

(27)  The  share  of  the  population  older  than  64  relative  to  that  of  the  working  age 
population  (20-64)  is  projected  to  more  than  double  by  2070,  when  there  would  be 
fewer  than  two  potential  contributors  for  every  retiree  compared  to  nearly  four 
contributors in 2022. This ageing of the population requires the pension system to be 
protected  against  rising  costs.  The  pension  reform  announced  in  September  2022 
keeps  the  pension  age  at  66.  The  government  therefore  intends  to  address  the 
sustainability of the pension system on the contributions side. In 2023, the government 
is  expected  to  present  a  roadmap  for  a  gradual  increase  in  social  insurance 

19 

20 

The structural balance (cyclically-adjusted balance net of one-off and temporary measures) recalculated 
by the Commission using the commonly agreed  methodology points to a structural deficit of 0.9% of 
GDP in 2023 and a surplus of 0.1% in 2024. 
Net  primary  expenditure  is  defined  as  nationally  financed  expenditure  net  of  discretionary  revenues 
measures and excluding interest expenditure as well as cyclical unemployment expenditure. 

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(28) 

contributions between 2024 and 2034. This would add clarity to how it plans to set out 
the financing arrangements of the state pension system. 

In accordance with Article 19(3), point (b) and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. The implementation 
of Ireland’s recovery and resilience plan is underway, however with significant delays. 
Limited resources and insufficient prioritisation have led Ireland to fall behind in the 
implementation  process.  Ireland  submitted  an  amendment  of  its  plan  in  May  2023. 
Ireland  has  yet  to  submit  its  first  payment  request.  Preparation  of  a  REPowerEU 
chapter  is  ongoing.  The  swift  inclusion  of  the  new  REPowerEU  chapter  in  the 
recovery  and  resilience  plan  will  allow  additional  reforms  and  investments  to  be 
financed in support of Ireland’s strategic objectives in the field of energy and the green 
transition. The systematic and effective involvement of local and regional authorities, 
social  partners  and  other  relevant  stakeholders  remains  important  for  the  successful 
implementation  of  the  recovery  and  resilience  plan,  as  well  as  other  economic  and 
employment policies going beyond the plan, to ensure broad ownership of the overall 
policy agenda.  

(29)  The Commission approved all of Ireland’s cohesion policy programming documents in 
2022. Proceeding with the swift implementation of the cohesion policy programmes in 
complementarity  and  synergy  with  the  recovery  and  resilience  plan,  including  the 
REPowerEU  chapter,  is  key  to  achieving  the  green  and  digital  transition,  increasing 
economic and social resilience as well as achieving balanced territorial development in 
Ireland. 

(30)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan, Ireland faces a number of additional challenges related to the circular economy, 
drinking water supply and wastewater treatment, as well as to  the electricity system, 
energy  infrastructure  and  smart  grid  technologies,  permitting  framework,  energy 
efficiency, sustainable transport and green skills. 

(31) 

Ireland’s  waste  generation  continues  to  rise  and  remains  significantly  above  the  EU 
average. Its recycling performance has been stagnating for several years. The circular 
use  of  materials  slightly  increased  to  2%  in  2021,  but  remains  well  below  the  EU 
average  of  11.7%.  While  improvements  in  waste  management  are  being  made,  the 
impact  of  the  2020  waste  action  plan  for  a  circular  economy  and  the  whole-of-
government circular economy strategy published in December 2021 has yet to be felt. 
More  investments  are  needed  to  reach  the  EU’s  circular  economy  objectives.  This 
involves  improving  separate  waste  collection  and  treatment  infrastructure  to  divert 
waste  from  landfilling  and  incineration,  with  a  particular  focus  on  plastic  and 
biowaste. On water management and quality, Ireland is confronted with an ageing and 
outdated  infrastructure,  resulting  in  one  of  the  highest  pipe  leakage  rates  in  the  EU. 
The quality of drinking water also remains a problem in certain areas. Degradation of 
water quality from agricultural  expansion is  not sufficiently addressed.  Infrastructure 
investment  is  also  needed  in  river  restoration  as  well  as  a  more  comprehensive 
approach to controlling water contamination from agricultural activities. 

(32) 

Ireland’s  power  system  showed  signs  of  vulnerability  in  2022  as  electricity  supply 
issues  required  emergency  support  measures.  Its  climate  action  plan  includes  the 
ambitious goal of transforming the country’s energy system by 2030 with the aim of 
achieving  80%  renewable  electricity.  This  will  result  in  large  volumes  of  variable 
generation. Current flexibility in the system and its integration are insufficient to cope 

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(33) 

with such large volumes of variable generation and with the growing energy demand, 
in particular from data centres, which could make it difficult to achieve the renewables 
target.  Demand-side  flexibility  and  major  upgrades  to  the  transmission,  distribution 
and  storage  infrastructure  will  be  key  elements  in  reducing  Ireland’s  dependence  on 
fossil fuel imports and in facilitating and accelerating its transition towards a climate-
neutral  energy  system.  The  key  challenges  in  the  development  of  demand-side 
flexibility include the lack of a coordinated strategy covering the whole energy system, 
including  heating  and  cooling,  as  well  as  the  lack  of  smart  metering  infrastructure. 
Improving  the  efficiency  of  the  planning  and  permitting  system  for  renewables, 
storage and grid connectors by ensuring that appropriate staffing with adequate skills 
is  available  at  all  stages  of  planning  processes  and  by  streamlining  the  overall 
framework  could  speed  up  large-scale  developments,  thereby  accelerating  the  green 
transition. 

Ireland’s  consumption  of  natural  gas  has  dropped  by  0.2%  in  the  period  between 
August 2022  and March 2023, compared with the average gas consumption over the 
same period in the preceding 5 years, well below the 15% reduction target. Despite the 
exemption granted to Ireland, Ireland is encouraged to enhance efforts to temporarily 
reduce gas demand until 31 March 202421. Energy efficiency measures will play a key 
role  in  reducing  energy  consumption  and  helping  achieve  the  EU-wide  target  of 
reducing net greenhouse gas emissions by at least 55%. Residential energy upgrades, 
retrofitting  and  the  fast  deployment  of  renewable  heating  will  be  key  to  achieving 
climate  objectives.  Despite  ambitious  targets  to  retrofit  the  equivalent  of  500 000 
homes  so  they  achieve  a  Building  Energy  Rating  (BER)  of  B2,  as  well  as  installing 
400 000 heat pumps in existing homes to replace older, less efficient heating systems 
by  the  end  of 2030,  challenges remain,  largely  due to  the shortage of skilled labour. 
The number of zero-emission vehicles in the Irish fleet is growing rapidly from a very 
low base, but the density of public charging points struggles to keep pace. Only around 
100 kilometres of railway lines are electrified, making Ireland the EU country with the 
lowest share of electrified railways. In addition, road congestion puts a high burden on 
air quality and commuters’ time. 

(34)  Labour  and  skills  shortages  in  sectors  and  occupations  key  for  the  green  transition, 
including  manufacturing,  deployment  and  maintenance  of  net-zero  technologies,  are 
creating  bottlenecks  in  the  transition  to  a  net-zero  economy.  High-quality  education 
and  training  systems  that  respond  to  changing  labour  market  needs  and  targeted 
upskilling and reskilling measures are key to reducing skills shortages and promoting 
labour inclusion and reallocation.  To unlock untapped labour supply, these measures 
need  to  be  accessible,  in  particular  for  individuals  and  in  sectors  and  regions  most 
affected by the green transition. In 2022, labour shortages were reported in Ireland for 
12  occupations  that  required  specific  skills  or  knowledge  for  the  green  transition, 
including  environmental  protection  professionals,  engineering  professionals  and 
electrical  engineers.  In  addition,  labour  shortages  were  reported  as  a  factor  that 
constrained production in industry (46.8% of firms) and construction (60.3% of firms). 

(35) 

In light of the Commission’s assessment, the Council has examined the 2023 Stability 
Programme and its opinion22 is reflected in recommendation (1) below.  

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Council Regulation (EU) 2022/1369 and Council Regulation (EU) 2023/706. 
Under Articles 5(2) and 9(2) of Council Regulation (EC) No 1466/97. 

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(36) 

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 
Union, the Council recommended that euro area Member States take action, including 
through  their  recovery  and  resilience  plans,  to  (i)  preserve  debt  sustainability  and 
refrain  from  broad-based  support  to  aggregate  demand  in  2023,  better  target  fiscal 
measures taken to mitigate the impact of high energy prices and reflect on appropriate 
ways to wind down support as energy price pressures diminish; (ii) sustain high public 
investment and promote private investment to support the green and digital transition; 
(iii)  support  wage  developments  that  mitigate  the  loss  in  purchasing  power  while 
limiting  second-round  effects  on  inflation,  further  improve  active  labour  market 
policies  and  address  skills  shortages;  (iv)  improve  the  business  environment  and 
ensure that energy support to companies is cost-effective, temporary, targeted to viable 
firms  and  that  it  maintains  incentives  for  the  green  transition;  and  (v)  preserve 
macro-financial  stability  and  monitor  risks  while  continuing  to  work  on  completing 
the Banking Union. For Ireland, recommendations (1) (2), (3) and (4) contribute to the 
implementation of the first, second, and third euro area recommendations. 

HEREBY RECOMMENDS that Ireland take action in 2023 and 2024 to:  

1. 

2. 

3. 

4. 

Wind  down  the  energy  support  measures  in  force  by  the  end  of  2023.  Should 
renewed  energy  price  increases  necessitate  support  measures,  ensure  that  these  are 
targeted  at  protecting  vulnerable  households  and  firms,  fiscally  affordable,  and 
preserve incentives for energy savings. While maintaining a sound fiscal position in 
2024,  preserve  nationally  financed  public  investment  and  ensure  the  effective 
absorption  of  RRF  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and 
digital transitions.  

For the period beyond 2024, continue to pursue investment and reforms conducive to 
higher sustainable growth and preserve a prudent medium-term fiscal position.  

Ensure the fiscal sustainability of the state pension system by specifying its financing 
arrangements. 

Significantly  accelerate the implementation  of its recovery  and resilience  plan, also 
by  ensuring  sufficient  resources,  and  swiftly  finalise  the  addendum  and  the 
REPowerEU chapter with a view to rapidly starting its implementation. Proceed with 
the 
in  close 
complementarity and synergy with the recovery and resilience plan. 

implementation  of  cohesion  policy  programmes, 

speedy 

Accelerate investments to speed up the circular economy. Further develop both waste 
treatment  infrastructure  associated  with  the higher steps of the waste hierarchy  and 
economic  instruments  to  prevent  waste  and  increase  reused,  remanufactured  and 
recycled  content.  Develop  a  more  effective  system  for  the  separate  collection  of 
recyclable  waste,  including  biodegradable  waste.  Divert  waste  from  landfilling  and 
incineration,  with  a  particular  focus  on  plastic  and  biowaste.  Increase  efforts  to 
accelerate investments in the drinking water and wastewater infrastructure. 

Reduce overall reliance on fossil fuels. Focus efforts on improving flexibility in the 
electricity system and improving energy system integration. Design and implement a 
dedicated  strategy  for  the  development  of  demand-side  response  and  accelerate  the 
roll-out of smart metering infrastructure and smart grid technologies. Streamline the 
planning  and  permitting  framework  for  renewables,  storage  and  grid  connectors. 
Implement  additional measures  that  support  energy efficiency in  private  and public 

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buildings to reduce energy bills and energy system costs. Accelerate the installation 
of public charging points for zero-emission vehicles. Step up policy efforts aimed at 
the provision and acquisition of the skills needed for the green transition. 

Done at Brussels, 

For the Council 
The President 

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