Health spending already running €1bn over budget by the end of June

Spending by Mr Donnelly’s department is already €1bn ahead of where it should be after the first half of the year.

Mr Donohoe said he has met on a number of occasions with Mr Donnelly, and they are close to finalising plans on how to deal with the overspending during the second half of the year, while ensuring that standards of healthcare are maintained.

‘Corporation tax volatility underlies the need to treat half of these receipts as "windfall” in nature’

Speaking at the launch of the latest Exchequer returns, Mr Donohoe pointed out that a record amount of funds had been allocated to the Department of Health last year, and its budget was up by almost €7bn since 2019.

It was also noted that this compared favourably with health services in other countries.

“We are seeing evidence again of a growing overspend,” he said.

“Stephen Donnelly and I are working to look at how that issue can be dealt with in a more effective way in the second half of the year.

“I am hopeful that we will be able to conclude that work very shortly. We are close now to finalising an agreement.”

However, another surge in corporation tax receipts means the State’s coffers are bulging with cash just halfway through the year – which will inevitably pile pressure on Mr Donohoe and new Finance Minister Jack Chambers to deliver a giveaway budget that could come as early as September.

Tax receipts of €9bn were collected in June, up by €1.8bn (or 22.6pc) on last year, with all the main revenue streams performing well.

Overall, tax receipts of €44.7bn were collected in the first half of the year, a figure up more than 9pc on the same period in 2023.

The money collected in taxes in the first half of the year isn’t far off the €50bn total tax take in the entire 12 months of 2017 – an indication of how dramatic the shift in the public finances has been in recent years.

Spending is more than keeping pace, however.

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Total gross voted expenditure in the first half of the year was €47.1bn, up 12.4pc above the same period in 2023, and €1.5bn above profile.

On the income side, booming corporation taxes are the big driver of the over-performance – but income tax, Vat and other headings are all up too.

The overall outcome leaves a budget surplus in the year to the end of June of €3.1bn.

‘The stand-out feature is undoubtedly the sharp spike in corporation tax receipts in June’

In a bid to dampen the expectations of his cabinet colleagues for more spending in the budget, Mr Chambers pointed out that the surge in corporation tax cannot be taken for granted, as the receipts are volatile and highly concentrated.

“The stand-out feature is undoubtedly the sharp spike in corporation tax receipts in June, which means that in the year to date, this revenue stream is well above its level in the same period last year,” he said.

“There has been considerable volatility – in both directions – in corporation tax revenues over the last number of months, underlying the need to treat around half of these receipts as windfall in nature.

"There is also overwhelming evidence that confirms the highly concentrated nature of these receipts.”

John McCarthy, the Department of Finance’s chief economist, said there “might be a little upside” overall in corporation tax receipts for the entire year.

He said the projection was for about €24bn to be taken in, about half of which would be non-recurring.