Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Ireland
Date: 2026-02-06
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Ireland, budget deficit, coordination of EMU policies, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, structural adjustment

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   EUROPEAN COMMISSION  Brussels, 6.2.2026  COM(2026) 75 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Ireland    
 
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Ireland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof, 

Having regard to Regulation (EU) 2024/1263, and in particular Article 17 thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

GENERAL CONSIDERATIONS 

(1) 

(2) 

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2 

The  EU’s  economic  governance  framework1  aims  at  promoting  sound  and 
sustainable  public  finances  and  sustainable  and  inclusive  growth  and  resilience 
through  reforms  and  investments  and  preventing  excessive  government  deficits.  It 
also  promotes  national  ownership  and  has  a  greater  medium-term  focus,  combined 
with more effective and coherent enforcement of the rules. 

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council  and  to  the  Commission  are  at  the  centre  of  the  new  economic  governance 
framework. The plans are to deliver on two objectives: i) ensuring that, inter alia, by 
the  end  of  the  adjustment  period,  general  government  debt  is  on  a  plausibly 
downward  trajectory,  or  stays  at  prudent  levels,  and  that  the  government  deficit  is 
brought and maintained below the reference value of 3% of GDP over the medium 
term, and ii) ensuring the delivery of reforms and investments responding to the main 
challenges  identified  in  the  context  of  the  European  Semester  and  addressing  the 
common  priorities  of  the  EU.  To  that  end,  each  plan  is  to  present  a  medium-term 
commitment  to  maximum  growth  rates  of  net  expenditure2,  which  effectively 
establishes a budgetary constraint for the duration of the plan, covering four or five 
years (depending on the regular term of legislature in a Member State). In addition, 
the plan is to explain how the Member State will ensure the delivery of reforms and 
investments  responding  to  the  main  challenges  identified  in  the  context  of  the 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  (OJ  L, 
together  with  Council 
2024/1263,  30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1263/oj), 
Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the 
excessive deficit procedure (OJ L, 209, 2.8.1997, ELI: http://data.europa.eu/eli/reg/1997/1467/2024-04-
30),  and  Council  Directive  2011/85/EU  of  8  November  2011  on  requirements  for  budgetary 
frameworks 
ELI: 
the 
http://data.europa.eu/eli/dir/2011/85/2024-04-30). 
Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure 
net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii)  expenditure  on  Union 
programmes fully matched by revenue from Union funds,  (iv) national expenditure on co-financing of 
programmes funded by the Union, (v) cyclical elements of unemployment benefit expenditure and (vi) 
one-offs and other temporary measures.  

23.11.2011, 

Member 

States 

306, 

(OJ 

L, 

of 

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European Semester, in particular in the country-specific recommendations (including 
those  pertaining  to  the  macroeconomic  imbalances  procedure  (MIP)),  and  how  the 
Member State intends addressing the common priorities of the Union. The period for 
fiscal  adjustment covers  four years, which may be extended by up to  three years if 
the  Member  State  commits  to  delivering  a  set  of  relevant  reforms  and  investments 
that satisfies the criteria set out in Regulation (EU) 2024/1263. 

(3) 

(4) 

Following  the  submission  of  the  plan,  the  Commission  is  to  assess  whether  it 
complies with the requirements of Regulation (EU) 2024/1263. 

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation  to  set  the  maximum  growth  rates  of  net  expenditure  path  of  the 
Member  State  concerned  and,  where  applicable,  to  endorse  the  set  of  reform  and 
investment commitments underpinning an extension of the fiscal adjustment period. 

RELATED PROCESSES, INCLUDING THE PREVIOUSLY RECOMMENDED NET 
EXPENDITURE PATH AND ITS ASSESSMENT 

(5) 

(6) 

(7) 

On  15  October  2024,  Ireland  submitted  its  national  medium-term  fiscal-structural 
plan,  covering  the  period  from  2025  until  2029.  On  21  January  2025,  the  Council 
adopted  a  recommendation  endorsing  the  plan  of  October  20243.    To  assess 
compliance  in  2025,  the  maximum  net  expenditure  growth  rate  established  by  the 
Council  Recommendation  of  21  January  2025  remains  relevant.  The  Commission 
will  assess  compliance,  based  on  outturn  data,  in  the  context  of  the  European 
Semester package of spring 2026. 

On 25 November 2025, as part of the Autumn 2025 European Semester package, the 
Commission  published its most recent  assessment  of  Ireland’s compliance with  the 
maximum growth rates of net expenditure recommended by the Council in January 
2025.4  According  to  Commission  estimates,  the  net  expenditure  growth  rate  of 
Ireland  in  2025  was  above  the  recommended  maximum,  corresponding  to  an 
expected  deviation  of  0.5%  of  GDP.  Considering  2024  and  2025  together,  the 
cumulative  growth  rate  of  net  expenditure  was  also  projected  above 
the 
recommended  maximum  cumulative  growth  rate,  corresponding,  however,  to  a 
smaller deviation: 0.2% of GDP.  

This  assessment  took  into  account  the  Draft  Budgetary  Plan  for  the  year  2026  that 
Ireland submitted on 15 October 2025. The Commission adopted an opinion on this 
Draft Budgetary Plan on 25 November 20255. The Commission was of the opinion 
that  the  Draft  Budgetary  Plan  of  Ireland  complied  with  the  budgetary  policy 
obligations of the Stability and Growth Pact, as the budgetary position for 2026 was 
projected to be in surplus, thus contributing to a reduction in the government debt-to-
GDP  ratio.  At  the  same  time,  the  Commission  opinion  noted  the  above-described 
deviation, and risks of deviation, from the maximum growth of net expenditure in the 
Council Recommendation of 21 January 2025.  

3  Council  Recommendation  of  21  January 2025  endorsing  the  medium-term  fiscal-structural  plan  of  Ireland, 

OJ C/2025/667, 10.2.2025. 

4 

5 

Commission communication “Reflecting the economic governance framework in national fiscal policy” 
of 25 November 2025, COM(2025)951 final. 
Commission Opinion on the Draft Budgetary Plan of Ireland, 25.11.2025, C(2025)9059 final. 

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(8) 

On  8  July  2025,  the  Council  addressed  to  Ireland  a  series  of  country-specific 
recommendations (CSRs) in the context of the European Semester6. 

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF IRELAND 

(9) 

According  to  Article  15(2)  of  Regulation  2024/1263,  in  the  case  of  a  newly 
appointed  government,  a  Member  State  may  submit  a  revised  medium-term  fiscal-
structural  plan.  Following  general  elections  in  November  2024,  a  new  government 
was established on 23 January 2025. On 9 January 2026, Ireland submitted a revised 
national  medium-term  fiscal-structural  plan  (henceforth  ‘the  plan’)  to  the  Council 
and to the Commission. The plan covers the period from 2026 until 2030.  

Process prior to the submission of the plan of January 2026 

(10) 

(11) 

(12) 

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9 

Ireland  was  eligible  for  receiving  technical  information7  from  the  Commission  but 
did not request it. The Commission provided to Ireland on 19 December 2025, and 
published  on  12  January  20268,  the  main  initial  conditions  and  underlying 
assumptions  used  in  the  Commission’s  medium-term  government  debt  projection 
framework9, as referred to in Recital (25) of Regulation (EU) 2024/1263. 

In line with Article 12 of Regulation (EU) 2024/1263, Ireland and the Commission 
engaged  in  a  technical  dialogue  in  the  course  of  October  and  December  2025.  The 
technical  dialogue  centred  on  the  maximum  growth  rates  of  net  expenditure 
envisaged  by  Ireland  and  their  underlying  assumptions  as  well  as  on  the envisaged 
delivery of reforms and investments responding to the main challenges identified in 
the context of the European Semester and the common priorities of the Union in fair 
green and digital transition, social and economic resilience, energy security and the 
build-up of defence capabilities. 

In June 2025, in line with Article 11(3) of Regulation (EU) 2024/1263, according to 
the  information  provided  by  Ireland  in  its  plan,  Ireland  engaged  in  a  consultation 
process  with  civil  society,  social  partners,  regional  authorities  and  other  relevant 
stakeholders.  According  to  the  information  provided  by  Ireland  in  its  plan,  the 
Government  hosted  the  National  Economic  Dialogue  (NED),  an  annual  event  that 
provides  a  forum  for  stakeholders  to  exchange  with  the  Government  on  economic 
and social priorities. Discussions at the NED 2025 were framed around the theme of 

Council  Recommendation  on  the  economic,  social,  employment,  structural  and  budgetary  policies  of 
Ireland, OJ C/2025/3981, 20.8.2025. 
According  to  Article 2  of  Regulation  2024/1263,  ‘technical  information’  means  the  guidance 
transmitted by the Commission upon request to Member States with government debt not exceeding 60 
%  of  GDP  and  government  deficit  not  exceeding  3  %  of  GDP  before  Member  States  draw  up  their 
national medium-term fiscal-structural plans. 
https://economy-finance.ec.europa.eu/document/download/3b78cf93-fed7-419c-bb9a-
ed6b74913733_en?filename=Commission_prior_guidance-2025-ireland_en.pdf 
The main initial conditions and underlying assumptions are in line with  the methodology described in 
(https://economy-
the 
finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  They  are  based  on 
the 
European  Commission  Autumn  2025  Forecast  and  its  medium-term  extension  up  to  2033,  and  long-
term GDP growth and ageing costs are in line with the joint Commission-Council 2024 Ageing Report 
(https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-budgetary-
projections-eu-member-states-2022-2070_en). 

Commission’s 

Sustainability 

Monitor 

2023 

Debt 

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medium-term  budgetary  planning  in  the  context  of  Ireland’s  obligations  under  the 
revised EU fiscal framework. 

(13) 

The  Irish  Fiscal  Advisory  Council  (IFAC)  delivered  an  opinion  on 
the 
macroeconomic  forecast  and  the  macroeconomic  assumptions  underpinning  the  net 
expenditure  path  in  the  plan.  The  plan  is  based  on  the  macroeconomic  forecasts 
underpinning  the  national  budget  for  2026  covering  the  years  2025  to  2030,  which 
were  endorsed  by  the  IFAC  on  26  September  2025.  The  IFAC  was  satisfied  the 
forecasts were “within an endorsable range”. 

(14) 

The plan was adopted by the government on 19 December 2025 and submitted to the 
national parliament on 9 January 2026.  

SUMMARY OF THE PLAN AND THE COMMISSION’S ASSESSMENT THEREOF 

(15) 

In line with Article 16 of Regulation (EU) 2024/1263, the Commission assessed the 
plan of January 2026 as follows: 

Context: macroeconomic and fiscal situation and outlook  

(16) 

(17) 

Real  GDP  in  Ireland  grew  by  2.6%  in  2024,  driven  by  export  growth,  mainly  in 
specific  multinational-dominated  sectors.  According  to  the  European  Commission 
Autumn 2025 Forecast, the economy is expected to have grown by 10.7% in 2025, 
on the back of strong pharmaceutical exports, partly reflecting front-loading ahead of 
expected  changes  in  US  tariff  policy.  Modified  domestic  demand,  which  better 
reflects the domestic economic activity in Ireland, is expected to have increased by 
3.4%.  In  2026,  real  GDP  is  set  to  increase  by  0.2%,  negatively  impacted  by  the 
unwinding  of  the  front-loading  in  2025,  but  supported  by  growth  in  export  of 
services and domestic demand. In 2027, real GDP is expected to increase by 2.9%, 
reflecting  positive  contributions  from  both  exports  and  domestic  demand.  Over  the 
forecast  horizon  (i.e.,  2025-2027),  potential  GDP  growth  in  Ireland  is  expected  to 
gradually  decline  from  4.5%  in  2025  to  3.5%  in  2027,  primarily  driven  by  a 
decelerating  contribution  from  labour.  The  unemployment  rate  stood  at  4.3%  in 
2024. According to the European Commission Autumn 2025 Forecast, it is estimated 
to have been 4.6% in 2025, and is projected to be 4.7% in 2026 and 2027. Inflation 
(GDP deflator) is estimated to have decreased from 4.5% in 2024 to 2.1% in 2025, 
and is projected to reach 2.0% in 2026 and 1.8% in 2027.  

Regarding  fiscal  developments,  in  2024  Ireland’s  general  government  surplus 
amounted  to  4.0%  of  GDP.  According  to  the  European  Commission  Autumn  2025 
Forecast, it is estimated at 1.5% of GDP in 2025, projected to decline further to 1.0% 
of  GDP  in  2026  and,  on  a  no-policy-change  basis,  to  0.8%  in  2027.  The European 
Commission  Autumn  2025  Forecast  takes  into  account  Ireland’s  draft  budget  for 
2026 that the government proposed in October 2025, and which has been adopted by 
the national parliament in the meantime. The general government debt was 38.3% of 
GDP at  end-2024. According to  the European Commission  Autumn  2025 Forecast, 
the  debt  ratio  is  expected  to  have  declined  to  33.1%  of  GDP  at  end-2025.  It  is 
projected to further decline to 32.5% of GDP at end-2026 and 31.3% at end-2027.  

Maximum growth rates of net expenditure and main macroeconomic assumptions in the 

plan of January 2026 

(18) 

The  plan  covers  the  period  2026-2030  and  presents  a  fiscal  adjustment  over  four 
years. 

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(19) 

(20) 

The  plan  contains  all  information  required  by  Article  13  of  Regulation  (EU) 
2024/1263. 

The  plan  commits  to  the  maximum  growth  rates  of  net  expenditure  indicated  in 
Table 1 hereunder, corresponding to average annual net expenditure growth of 6.7% 
over the years 2026-2030. 

Table 1: Maximum net expenditure growth and main assumptions in Ireland’s plan 

2026 

2027 

2028 

2029 

2030 

Average 
over the 
period of 
validity of 
the plan 

2026-
2030 

 Average 
over the 
adjustme
nt period 

2026 – 
2029 

6.6 

6.0 

7.6 

6.7 

6.4 

6.7 

6.7 

16.5 

23.5 

32.9 

41.7 

50.9 

– 

– 

1.0 

4.6 

3.6 

3.6 

3.6 

3.3 

3.2 

2.0 

2.1 

2.2 

2.2 

2.3 

2.2 

2.1 

Net expenditure 
growth 
(annual, %) 

Net expenditure 
growth 
(cumulative, from 
base year 2024(*), 
%) 

Potential GDP 
growth (%) 

Inflation (GDP 
deflator growth) 
(%) 

Source: Medium-term fiscal-structural plan of Ireland (January 2026) and Commission calculations.  
(*)  The  cumulative  growth  rates  are  calculated  by  reference  to  the  base  year  of  2024,  the  latest  year  for  which 
outturn fiscal data have been published by the national statistical institute and Eurostat. For 2025, the plan projects 
net  expenditure  growth  of  9.3%.  The  cumulative  balance  of  the  control  account  for  the  first  year  (2026)  and 
subsequent years of the plan of January 2026 will include the difference  between that projection and the outturn 
data for 2025. 

(21) 

The plan estimates the net expenditure growth rate in 2025 to have been 9.3%. This 
growth rate is relevant for defining the cumulative net expenditure growth rates for 
2026-2030 shown in Table 1, as the plan’s base year is 2024, the last year for which 
outturn data have been published by the national statistical institute and Eurostat. If 
outturn  data  for  2025  available  in  spring  2026  are  in  line  with  the  net  expenditure 
growth  rate  estimated  in  the  plan,  it  would  mean  that,  compared  to  the  Council 
Recommendation of 21 January 2025, Ireland would register an annual deviation of 
0.8% of GDP and a cumulative deviation of 0.5 % of GDP (see Table 2). At the same 
time, if the ratio of the government debt to GDP does not exceed the 60% of GDP 
reference value in 2025, as reported in the plan, the Commission would not prepare a 

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report  in  accordance  with  Article  126(3)  TFEU  10.  According  to  the  authorities, 
higher  net  expenditure  growth  in  2025  compared  to  the  Commission’s  estimate 
published in the Commission Opinion on the 2026 Draft Budgetary Plan of Ireland is 
explained by the more recent outturns of estimated spending in 2025, as published in 
the Revised Estimates Volume for Public Services 2026. 

Table 2: Net expenditure growth in 2025 

Net expenditure growth 
rate, % 

Expected deviations vis-
à-vis the 
Recommendation of 
January 2025, % of 
GDP 

2024 

2025 

2025 

Maximum  growth  rate,  annual  (Council 
Recommendation of 21 January 2025) 

9.8(*) 

5.1 

Maximum  growth  rate,  cumulated  (Council 
Recommendation of 21 January 2025) 

Annual 
Forecast) 

(Commission  Autumn 

2025 

Cumulated 
Forecast) 

(Commission  Autumn  2025 

Annual  (Estimate  in  the  revised  plan  of 
January 2026) 

Cumulated  (Based  on  the  net  expenditure 
growth  estimate  in  the  revised  plan  of 
January 2026) 

 - 

8.0 

 - 

7.9 

15.4 

7.7 

16.3 

9.3 

 - 

17.9 

- 

- 

0.5 

0.2 

0.8 

0.5 

Source:  Commission  Autumn  2025  Forecast, Medium-term  fiscal-structural plan  of  Ireland  (January 2026)  and 
Commission services’ calculations. 

(*) The 2024 growth rate that is implicit in the cumulated growth rate. 

(22) 

The maximum growth rates of net expenditure committed to in the plan are reported 
to  lead  to  a  structural  primary  balance  of  0.9%  of  GDP  at  the  end  of  the  4-year 
adjustment period (2029), and of 1.1% of GDP in 2030. This is higher than the ratio-
to-GDP  of  the  structural  primary  balance  in  2029  that,  based  on  the  Commission’s 
assumptions,  would  ensure  compliance  with  the  requirements  of  Regulation  (EU) 
2024/126311.  

10 

11 

According to Article 2(2), second paragraph, of Regulation 1467/97 “The Commission shall prepare a 
report in accordance with Article 126(3) TFEU where the ratio of the government debt to GDP exceeds 
the reference value, the budgetary position is not close to balance or in surplus and where the deviations 
recorded  in  the  control  account  of  the  Member  State  exceed  (a) either  0,3  percentage  points  of  GDP 
annually, (b) or 0,6 percentage points of GDP cumulatively.” 
In the scenario without the deficit resilience safeguard.  

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(23) 

The  plan  assumes  potential  GDP  growth  to  increase  from  1%  in  2026  to  4.6%  in 
2027,  and  to  stabilise  at  3.6%  from  2028.  In  addition,  the  plan  expects  the  growth 
rate of the GDP deflator to gradually increase to 2.3% in 2030, from 2.0% in 2026. 

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance 

(24) 

Based on the plan’s maximum growth rates of net expenditure and assumptions, the 
general government surplus would gradually decrease from 1.5% of GDP in 2025 to 
0.5%  of  GDP  in  2029.  Thus,  according  to  the  plan,  there  would  be  no  general 
government  deficit  exceeding  the  3%  of  GDP  reference  value  at  the  end  of  the 
adjustment period 2029. In addition, in the ten years following the adjustment period 
(i.e.  until  2039),  the  government  deficit  would  not  exceed  3%  of  GDP.  Therefore, 
based  on  the  plan’s  policy  commitments  and  macroeconomic  assumptions,  the 
maximum growth rates of net expenditure put forward in the plan are consistent with 
the  requirement  for  the  deficit  as  set  out  in  Article  16(2)  of  Regulation  (EU) 
2024/1263. 

Implications of the plan’s net expenditure commitments for general government debt 

(25) 

If  the  maximum  growth  rates  of  net  expenditure  committed  to  in  the  plan  and  the 
underlying  assumptions  materialise,  general  government  debt  would,  according  to 
the plan, gradually decrease from 33.0% in 2025 to 30.0% of GDP at the end of the 
adjustment  period  (2029),  as  per  the  following  table.  After  the  4-year  adjustment 
period, over the medium term (i.e. until 2039), the debt ratio is expected to continue 
decreasing and to be well below 60% of GDP to reach 23.7% of GDP by 2039. Thus, 
according  to  the  plan,  general  government  debt  would  stay  below  the  Treaty 
reference  value  of  60%  of  GDP  over  the  medium  term.  Therefore,  based  on  the 
plan’s policy commitments and macroeconomic assumptions, the maximum growth 
rates of net expenditure put forward in the plan are consistent with the requirement 
for debt as set out in Article 16(2) of Regulation (EU) 2024/1263. 

Table 3: General government debt and balance developments in Ireland’s plan 

2024 

2025 

2026 

2027 

2028 

2029 

2030 

2039 

Government debt 

38.3 

33.0 

32.4 

31.5 

30.7 

30.0 

28.8 

23.7 

(% of GDP) 

Government 
balance 

(% of GDP) 

4.0 

1.5 

0.8 

1.0 

0.7 

0.5 

0.5 

-0.8 

Source: Medium-term fiscal-structural plan of Ireland (January 2026) 

Macroeconomic assumptions of the plan 

(26) 

The  plan  is  based  on  a  set  of  assumptions  which  differs  from  the  Commission’s 
assumptions which were transmitted to Ireland on 19 December 2025. In particular, 

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the plan uses different assumptions for eight variables, namely the starting point (the 
structural  primary  balance  in  2025),  potential  GDP  growth,  real  GDP  growth  and 
output gap closure, GDP deflator growth, the revenue elasticity to nominal potential 
GDP,  the  stock-flow  adjustment  and  nominal  implicit  interest  rates.  A  careful 
assessment  of  these  differences  in  assumptions  is  necessary,  especially  as  average 
maximum net expenditure growth in the plan is higher than what would result from 
the  Commission’s  assumptions.  The  differences  in  assumptions  with  the  most 
significant  impact  on  the  average  net  expenditure  growth  ceiling  are  listed  and 
assessed below.  

• 

The  plan  assumes  a  higher  structural  primary  balance  for  2025,  namely  a 
surplus  of  1.1%  of  GDP,  while  it  was  expected  it  to  be  balanced  (at  0%  of 
GDP)  in  the  Commission  Autumn  2025  Forecast.  At  the  same  time,  the 
estimated headline balance for 2025 in the plan, namely a surplus of 1.5% of 
GDP,  is  in  line  with  the  Commission  Autumn  2025  Forecast.  The  more 
favourable starting point assumption in the plan in terms of structural primary 
balance is explained by the plan's reliance on a national concept of output gap, 
which  differs  from  the  EU  commonly  agreed  methodology  and  implies  a 
smaller  cyclical  contribution.  Whereas  the  national  assessment  of  the  output 
gap conceptually deviates from the EU commonly agreed methodology, there 
are  strong  indications  that  the  positive  output  gap  resulting  from  the  EU 
commonly agreed methodology is excessively large. Ireland’s GDP is expected 
to have recorded an exceptional growth rate of more than 10% in 2025, partly 
due to the sharp increase in pharma-related exports after the announcement of 
incoming  higher  tariffs  by  the  US  administration  (12).  Estimates  of  labour 
market slack and capacity pressures in the economy (13), combined with easing 
domestic  inflation  (14),  are  not  consistent  with  a  large  positive  output  gap. 
Moreover,  considering  the  structural  primary  balance  in  2024  (3.1%)  and  in 
2026 (1.4%) in the Commission Autumn 2025 Forecast, the plan’s assumption 
of a structural primary surplus of 1.1% of GDP in 2025 could be considered as 
a conservative assumption. Consequently, this difference in this assumption is 
deemed  to  be  duly  justified.  Taken  on  its  own,  it  increases  the  average  net 
expenditure  growth  ceiling  over  the  adjustment  period  compared  with  the 
Commission’s assumptions.  

• 

In the plan, potential GDP growth over the plan period is lower by 0.5 pp. on 
average  compared  to  the  Commission’s  assumptions.  Accordingly,  the  plan 
also  assumes  real  GDP  growth  to  be  lower.  The  plan  assumes  closure  of  the 
output gap by 2031, i.e. one year earlier than in the Commission’s assumptions. 
Consequently, these assumptions are deemed to be prudent and, therefore, duly 
justified.  Together,  they  contribute  to  lower  average  net  expenditure  growth 

12 

13 

14 

As a small open economy with strong trade and investment links with the US, Ireland is highly sensitive 
to global economic conditions, particularly developments in the US economy. 
Labour market slack, a broad measure of labour underutilisation, increased in Ireland over the first three 
quarters  of  2025,  indicating  a  moderation  in  labour  market  conditions.  Capacity  utilisation  in 
manufacturing  industry  remained  broadly  stable  in  2025,  indicating  no  material  increase  in  capacity 
pressures. 
This  is  proxied  by  services  HICP  inflation,  which  has  decelerated  in  2025.  Services  HICP  inflation 
captures domestic price pressures more accurately than the GDP deflator, which can be distorted by the 
activity of multinationals in Ireland. 

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• 

• 

over  the  adjustment  period  in  the  plan  than  according  to  the  Commission’s 
assumptions.  

The plan assumes GDP deflator growth to be higher by 0.3 pp. over the period 
2027-2030  compared  with  the  Commission’s  assumptions.  The  difference  in 
the GDP deflator growth forecast in 2027 (2.1% in the plan against 1.8% in the 
Commission Autumn 2025 Forecast) appears to be primarily driven by a higher 
deflator  growth  rate  for  government  consumption.  This  mainly  reflects  more 
recent  information  on  the  cost  drivers  of  public  service  delivery,  including 
expected  staffing  levels  and  pay,  resulting  in  higher  growth  of  government 
expenditure  on  compensation  of  employees  than  assumed  in  the  Commission 
Autumn 2025 Forecast. This assumption is deemed to be duly justified. For the 
period  2028-2030,  the  GDP  deflator  growth  is  also  higher  by  0.3  percentage 
points  compared  to  the  Commission’s  assumptions  and  by  0.1  percentage 
points  than  what  would  be  required  under  the  common  framework  for  debt 
sustainability assessment (DSA) using an updated forecast for 2027 in line with 
the plan (i.e., assuming a linear convergence as from the plan’s deflator growth 
rate  in  2027  towards  market-based  inflation  expectations  for  2036).  In  the 
plan’s  macroeconomic  forecast,  higher  GDP  deflator  growth  is  driven  by 
trends  in  private  and  government  consumption  deflator  growth,  as  well  as  by 
the  strong  domestic  activity  expected  over  the  medium  term.  Overall,  the 
assumptions  for  the  period  2028-2030  are  not  consistent  with  the  common 
DSA  framework.  Taken  on  their  own,  they  contribute  to  higher  average  net 
expenditure  growth  over  the  adjustment  period  than  according  to  the 
Commission’s assumptions. 

The plan assumes higher revenue elasticities to nominal potential GDP growth 
than  in  the  Commission’s  assumptions.  This  reflects  differences  in  the 
methodologies  employed.  The  plan’s  assumptions  are  produced  based  on  a 
bottom-up approach with a detailed assessment of the expected developments 
in government revenues, whereas the Commission’s medium-term projections 
assume a unitary revenue elasticity. At the same time, the government intends 
to continue making transfers into the two saving funds established in 2024 (the 
Future Ireland Fund and the Infrastructure, Climate and Nature Fund). This is 
reflected in the plan’s higher stock-flow adjustments than in the Commission’s 
assumptions. Taken together, these revenue assumptions are deemed to be duly 
justified. 

The  remaining  differences  (the  nominal  implicit  interest  rate  assumptions)  do  not 
have a significant impact on the average net expenditure growth ceiling compared to 
the Commission’s assumptions.  

Overall,  the  differences  in  assumptions  taken  together  lead  to  a  theoretical  average 
net expenditure growth ceiling that is higher than what would be necessary to comply 
with  the  applicable  fiscal  rules  based  on  the  Commission’s  assumptions  of  autumn 
2025. On balance, the joint impact of more cautious assumptions and differences in 
assumptions  that  are  considered  as  duly  justified  outweighs  the  joint  impact  of  the 
differences  in  assumptions  that  are  not  consistent  with  the  DSA  framework. 
Moreover, Ireland commits in its plan to a net expenditure path that is lower than this 
theoretical ceiling.  

The  Commission's  assessment  according  to  which  the  plan  fulfils  the  legal 
requirements holds even when disregarding the plan’s assumption that the structural 

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primary  balance  (SPB)  increases  by  0.2  percentage  points  of  GDP  in  2030,  which 
constitutes a deviation from the ‘no-fiscal-policy-change’ assumption of the common 
DSA framework (under which the SPB remains constant at its level in the last year of 
the adjustment period, 2029). 

The  Commission  will  take  into  account  the  above  assessment  of  the  plan’s 
assumptions in future assessments of compliance with the maximum growth rates of 
net expenditure. 

Fiscal strategy of the plan 

(27) 

According  to  the  indicative  fiscal  strategy  in  the  plan,  the  commitments  on  net 
expenditure are consistent with further increases in government expenditure, notably 
to  provide  additional  public  services  to  meet  the  needs  of  a  rapidly  expanding 
population and to significantly increase the public sector investment rate, in a manner 
that more closely aligns spending growth with economic and tax revenue growth in 
the  medium  and  long  term.  This  will  be  complemented  by  structural  reforms  to 
reduce  delays  and  improve  delivery  of  major  infrastructure  projects,  as  outlined  in 
the  ‘Accelerating  Infrastructure  Action  Plan’.  In  order  to  build  up  fiscal  buffers, 
Ireland plans to continue making transfers to the two savings vehicles established in 
2024  mentioned  above.  While  the  plan  does  not  outline  any  revenue  measures,  the 
headline balance is projected to remain in surplus throughout the time period of the 
plan thanks to the significant impact of windfall corporate income tax revenues. The 
specification of the policy measures to be adopted is to be confirmed or adjusted and 
quantified  in  the  annual  budgets.  At  the  same  time,  there  are  risks  to  the 
macroeconomic and fiscal scenario underpinning the indicative fiscal strategy in the 
plan,  which  stem  from  the  high  degree  of  openness  of  the  Irish  economy  and  its 
concentration  in  a  few  multinational-dominated  sectors,  making  it  vulnerable  to 
adverse  international  developments,  such  as  shifting  US  trade  and  tax  policies  or 
global  tax  rules.  Ireland’s  Budget  for  2026  specifies  the  policy  measures  through 
which the net expenditure commitment for 2026 will be achieved15. 

Reform  and  investment  intentions  in  the  plan  responding  to  the  main  challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union 

(28) 

(29) 

The plan describes policy intentions concerning reforms and investments to respond 
to the main challenges identified in the context of the European Semester, as set out 
in  particular  in  the  2025  country-specific  recommendations  and  in  line  with  the 
priorities  of  the  Communication  “A  Competitiveness  Compass  for  the  EU”16.  The 
plan outlines 20 reforms and investments areas, of which 12 are financially supported 
by the Recovery and Resilience Facility and 10 by the cohesion policy funds.  

Concerning the common priority of a fair green and digital transition, including the 
climate  objectives  set  out  in  Regulation  (EU)  2021/1119,  the  plan  outlines  a 
consistent set of reforms and investments. Measures on water and wastewater include 
critical  infrastructure  projects  as  well  as  actions  outlined  in  the  Water  Action  Plan 
2024.  The  plan  refers  to  measures  on  waste  management  and  to  boost  the  circular 

15 
16 

See Commission Opinion on the Draft Budgetary Plan of Ireland, 25.11.2025, C(2025)9059 final. 
See  Commission  Communication  “A  Competitiveness  Compass  for  the  EU”  of  29  January  2025, 
COM(2025)30 final. 

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(30) 

(31) 

(32) 

(33) 

economy  that  will  be  set  out  in  the  forthcoming  Waste  Action  Plan  for  a  Circular 
Economy,  as  well  as  the  upcoming  Whole  of  Government  Circular  Economy 
Strategy 2026-2028. Measures related to sustainable transport include actions in the 
Renewable  Transport  Fuel  Policy  2025-2027  as  well  as  capital  investment  projects 
under  the  National  Development  Plan.  Measures  on  the  installation  of  public 
charging  points  for  zero-emission  vehicles  are  included  in  the  National  Road 
Network EV Charging Plan 2024-2030 and corresponding regional plans.  

Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European Pillar of Social Rights, the plan outlines measures to increase the supply of 
social and affordable housing through the implementation of the Delivering Homes, 
Building  Communities  plan  2025-2030.  In  addition,  measures  to  tackle  capacity 
constraints in the residential construction sector include the ongoing planning reform, 
increased  investment  under  the  updated  National  Development  Plan,  an  expanded 
remit  of  the  land  development  agency  (some  actions  are  included  in  Ireland’s 
Recovery and Resilience Plan (RRP)), the introduction of a residential zoned land tax 
as well as a reform of the rental sector. Measures to support research and innovation 
include actions in  Impact 2030 strategy, currently under a strategic review to guide 
its future delivery,  alongside other measures in the Action Plan on Competitiveness 
and Productivity.  Concerning the European Pillar of Social Rights, the plan outlines 
measures  to  strengthen  the  labour  market  and  social  inclusion  of  persons  with 
disabilities  and  single  parents.  Measures  include  actions  outlined  in  the  National 
Human Rights Strategy for Disabled People 2025-2030, subsidies provided through 
the  National  Childcare  Scheme  and  a  commitment  to  introduce  a  cap  on  fees  for 
early learning and childcare services. 

Concerning  the  common  priority  of  energy  security,  the  plan  outlines  measures  on 
the  deployment  of  renewables,  including  a  Renewable  Electricity  Support  Scheme, 
the  establishment  of  the  Offshore  Wind  Delivery  Taskforce,  actions  in  Future 
Framework  for  Offshore  Renewable  Energy  as  well  as  the  preparation  of  the 
National  Designated  Maritime  Area  Plan.  The  plan  also  outlines  measures  to 
improve the flexibility of the electricity grid and modernise and expand capacity to 
reduce  curtailment  through  the  development  grid  connectors  with  Northern  Ireland 
and  France.  The  plan  further  outlines  additional  capital  investments  in  grid 
development in the period 2026-2030. Measures on energy efficiency include actions 
outlined in the National Energy and Climate Plan and Climate Action Plans.   

Concerning the common priority of defence capabilities, the plan outlines measures 
to reinforce overall defence and security spending and readiness through an Updated 
Detailed Implementation Plan to address the remaining recommendations included in 
the Report of the Commission on the Defence Forces as well as actions to support the 
recruitment  and  retention  of  defence  personnel  and  improve  the  physical  working 
environment and equipment. 

In  addition,  the  plan  outlines  other  policy  measures  going  beyond  the  common 
priorities of the EU, including to make the healthcare system more cost effective by 
implementing savings and productivity measures included in the Action Plans of the 
Productivity  and  Savings  Taskforce  and  the  Medicines  Sustainability  Taskforce, 
further  digitalising  healthcare  record  and  information  systems,  developing  better 
primary and community care (some actions included in the RRP) and restructuring of 
the  health  service  executive  into  six  operational  health  regions.  The  plan  also 
mentions  measures  that  improve  the  sustainability  of  the  social  insurance  fund  and 
widen  pension  coverage.  In  addition,  although  no  recent  tax  base  broadening 

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(34) 

(35) 

measures are mentioned, the plan outlines preliminary measures to review the scope 
and impact of tax expenditures by publishing guidelines to improve the transparency 
and reporting of tax expenditures.  

The  plan  provides  information  on  the  consistency  and,  where  appropriate, 
complementarity  with  the  cohesion  policy  funds  and  Ireland’s  RRP.  The  plan 
includes  information  on  the  size  and  objectives  of  the  different  cohesion  policy 
funds.  The  plan  also  includes  a  table  outlining  which  structural  reforms  and 
investment priorities will be in part addressed through measures included in Ireland’s 
RRP or cohesion policy funds. 

The  plan  provides  a  general  overview  of  the  public  investment  needs  of  Ireland 
related to the common priorities of the Union. Public investment amounts are based 
on  the  2025  update  of  the  National  Development  Plan.  Concerning  the  common 
priority  of  a  fair  green  and  digital  transition,  the  plan  gives  a  general  outline  of 
investment  capital  to  be  made  available  until  2030  for  water  and  wastewater 
infrastructure  as  well  as  transport.  Concerning  the  common  priority  of  social  and 
economic resilience, the plan gives a general outline of investment capital to be made 
available  until  2030  for  housing  as  well  as  housing  targets  following  a  needs 
assessment.  Concerning  the  common  priority  of  energy  security,  the  plan  gives  a 
general outline of investment capital to be made available until 2030 for the energy 
and  electricity 
the  common  priority  of  defence 
capabilities, the plan includes a target for defence expenditure growth. 

infrastructure.  Concerning 

Conclusion of the Commission’s assessment 

(36) 

Overall, the Commission is of the view that Ireland’s plan of January 2026 fulfils the 
requirements of Regulation (EU) 2024/1263.  

OVERALL CONCLUSION  

(37) 

(38) 

This  recommendation  supersedes  the  Recommendation  of  21  January  2025. 
However,  the  maximum  growth  rates  of  net  expenditure  for  2025,  in  annual  and 
cumulative  terms,  in  Annex  I  of  the  Recommendation  of  21  January  2025  remain 
relevant to assess compliance until and including 2025. 

In accordance with Article 17 of Regulation (EU) 2024/1263, the maximum growth 
rates  of  net  expenditure  committed  to  in  the  plan  of  January  2026  should  be 
recommended by the Council to Ireland. 

HEREBY RECOMMENDS that Ireland: 

1. 

Ensure  that  net  expenditure  growth  does  not  exceed  the  maxima  established  in 
Annex I to this Recommendation. 

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ANNEX I 
Maximum growth rates of net expenditure 
(annual and cumulative growth rates, in nominal terms) 
Ireland 

Years 

2026 

2027 

2028 

2029 

2030 

Growth rates 
(%) 

Annual 

6.6 

6.0 

7.6 

6.7 

6.4 

Cumulative 
(*) 

16.5 

23.5 

32.9 

41.7 

50.9 

(*)  The  cumulative  growth  rates  are  calculated  by  reference  to  the  base  year  of  2024.  The 
cumulative  growth  rates  are  used  in  the  annual  monitoring  of  ex-post  compliance  in  the 
control account. 
Note:  For  2025,  the  maximum  annual  and  cumulative  net  expenditure  growth  rates 
established by the Council Recommendation of 21 January 2025 remain relevant and will be 
subject to assessments of compliance by the Commission based on outturn data. 

Done at Brussels, 

For the Council 
The President 

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