Irish public spending plan 'needs to be revised'

The Irish government's public investment plan needs to be revised to take account of a growing economy and a rising population, a leading think tank has said.

The National Development Plan (NDP) was published in 2018 and updated in 2021.

It set out a €165bn (£142bn) programme of infrastructure investment in things like housing, transport and energy.

But the Economic and Social Research Institute (ESRI) said the plan "may have underestimated what is needed".

It added that the challenge now is how to increase investment without fuelling inflation.

The government had asked the ESRI to assess what had changed since 2021, which would impact on investment needs and the capacity of the economy to deliver them.

The major developments have been a strong economic recovery from the pandemic and rapid population growth, driven by immigration.

The ESRI said that means that, for example, "it is almost certain that existing targets for housing supply understate need, given the stronger than expected increase in the population shown by early results from the 2022 Census".

It added: "Hence, higher output will be needed."

However, very low unemployment means it will be difficult to grow the construction workforce needed to build all the intended projects.

ESRI director Alan Barrett said the Irish government faces a dilemma.

"On the one hand, there is a clear need for investment in public infrastructure as our population and economy grow and our climate targets remain challenging," he added.

"However, on the other hand, the economy is operating at full employment, so the resources needed to accelerate the NDP are not readily available."

The ESRI has recommended that the government re-examine the sequencing of projects and potentially prioritise those which have the potential to ease inflationary pressures or which are less labour intensive.