Government spending a third higher than before the pandemic and up €8bn last year

Last October’s give-way budget means that spending tally will be significantly higher again in 2024.

Despite the surge in state spending Ireland still managed to record an €8.3bn surplus in the general government balance last year, down only slightly on the record surplus of €8.6bn in 2022.

Soaring tax receipts allowed spending to increase massively at the same time as the national debt fell, the CSO data shows.

Total government revenue increased to €123.7bn last year, €7.8bn higher than 2022, boosted by a combination of higher corporate taxes paid mostly by multinationals and surging amounts of income tax paid by record numbers of people in work.

Total government expenditure rose slightly faster to €115.4bn, up €8.1bn on the previous year.

Gross general government debt fell to €220.7 billion at the end of 2023.

Commenting on the new data, Tom Fitzgerald, Statistician in the Government Accounts Compilation & Outputs Division, said the state’s income and spending are up significantly since the start of the decade.

"Today’s results for the year 2023 shows revenue was 40pc higher than pre-pandemic levels, while expenditure was 33pc higher. Total government revenue of €123.7 billion, which was €7.8 billion higher than in 2022, was driven by the continued increase in tax revenue which grew by €4.7 billion in 2023.”

The surge in government spending reflects increases more or less across the board of most expenditure items, including public sector pay, social benefits and capital spending on the likes of schools, houses and hospitals.

There was a large reduction in any remaining Covid-era support schemes last year but ongoing cost of living measures and supports for Ukrainian refugees also contributed to a growth in expenditure, the CSO said.

Public sector pay increased by €2.3bn (8.1%). Social benefits in cash – including the State pension, job seeker allowance and child benefit rose by €1.7bn, while social benefits in kind which include an increase in expenditure on accommodation for refugees from Ukraine rose by €1.2bn.

Some of the higher spending by government reflected the hit from inflation – which helped push up the State’s bill for use of goods and services by €1.4bn and added €1.3bn to capital spending.

On the income side general government revenue continued to grow last year, but at a slower pace than in 2022 and 2021. Increases in taxes, social contributions and interest boosted receipts to €123.7 billion, 6.7% more than 2022.

The rise in income was across the board too including a €1.2bn increase in corporation tax which has almost doubling since 2020. Income tax grew by even more, up €1.9bn last year to €33.2 billion.