Tánaiste Simon Harris and Minister Jack Chambers publish the Annual Progress Report 2026
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Ó: An Roinn Airgeadais; An Roinn Caiteachais Phoiblí, Bonneagair, Athchóiriúcháin Seirbhíse Poiblí agus Digitiúcháin
- Foilsithe:
- An t-eolas is déanaí:
- Prior to the conflict in the Middle East, the economic data-flow in Ireland had been positive, and an upward revision to the outlook was on the cards.
- The outbreak of war in the Persian Gulf and the associated weaponisation of energy supplies have triggered a large energy price shock that is reverberating across other supply chains.
- The economic fallout will depend on the depth and duration of the conflict – while a fragile ceasefire holds at the moment, it has not been accompanied with any resumption of energy transiting through the Strait of Hormuz.
- The Department assesses three scenarios in its spring forecasts.
- The reference scenario is a fully-fledged economic forecast that was based on energy prices prevailing at mid-March levels.
- It involves headline inflation averaging 3.3 per cent this year, with Modified Domestic Demand (MDD) expanding by just over 2 per cent.
- A more adverse scenario involves inflation averaging 3.7 per cent while a severe scenario involves average inflation of 4.6 per cent.
- The full-year averages reflect relatively modest inflation in the first quarter but a sharp acceleration in the annual rate by year-end.
The Tánaiste and Minister for Finance, Simon Harris TD, and the Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Jack Chambers TD today (21st April) published the Government’s Annual Progress Report for 2026.
The Annual Progress Report is an important milestone in Ireland’s annual economic and fiscal cycle and forms a central part of our engagement with the European fiscal framework.
The APR sets out the Department of Finance’s latest macroeconomic and fiscal forecasts for the remainder of the decade, providing an evidence-based assessment of where our economy stands today and the risks the economy faces into the future.
The publication of this APR comes against the background of heightened global uncertainty and a spike in fuel prices caused by the war in the Middle East.
It sets out three different scenarios - baseline, adverse and severe - the projections under which differ depending on factors such as the depth and the duration of the conflict.
Commenting on the publication, the Tánaiste said:
“This year’s Annual Progress Report is being published at a time of considerable global uncertainty.
“Recent developments in the Gulf have resulted in significant disruption to global energy markets, and while efforts towards de‑escalation are welcome, the situation remains volatile.
“Against that backdrop, headline inflation is expected to average 3.3 per cent this year – 1½ percentage points higher than assumed in my Department’s Budget forecasts.
Modified Domestic Demand meanwhile is projected to grow by 2.1 per cent this year and by 3 per cent next year, which represents a modest downward revision relative to autumn.
“It is important to stress that these forecasts were calibrated on the assumption of a short and relatively contained conflict, with limited lasting damage to energy infrastructure in the Gulf.
Given the level of uncertainty, the APR includes two alternative scenarios that assess the potential impact of a more severe and prolonged disruption to global energy supplies. Under these scenarios, Modified Domestic Demand would still grow, but at a slower pace, while inflation would also be higher in those circumstances relative to baseline.
“The turbulence in the international environment is a reminder of the importance of keeping our approach to overall budgetary policy balanced and sustainable across the medium-term. “It is because of this Government’s careful management of the public finances that we have had the fiscal firepower to respond to help households and firms hit by rising energy prices.
“Looking ahead, policy formulation for Budget 2027 will take place over the summer, and the appropriate fiscal policy will be considered as part of the Summer Economic Statement.”
Commenting on the publication, Minister Chambers said:
“I welcome today’s publication of the Annual Progress Report. This is a key reporting document as part of the EU Fiscal Framework.
“The APR acknowledges the potential challenges posed by the current international environment. That said, Ireland has weathered several challenges over recent years and the economy continues to perform strongly with further growth projected across different scenarios. To ensure that we are in a position to continue to deliver on capital investment and public services, it is important we implement our fiscal policy as set out in the Medium-Term Plan.
“In a rapidly changing and increasingly uncertain world, we want to provide certainty on Government’s plans to invest sustainably. Investment will continue to increase with expenditure reaching €125.5 billion in 2027.
“This will provide for increased capital investment in critical infrastructure and enable continued enhancement of public services.
“The Government has decided to increase the Government Expenditure Ceiling for this year by €0.7 billion to €118.5 billion. This additional funding will provide support to the transport, farming and fisheries sectors facing increasing energy prices as announced last week. It will also provide additional supports and staffing in the Education sector, partly accounted for through a new Government levy.
“Looking ahead, while the overall outlook is positive, a prolonged conflict in the Middle East poses challenges for the Irish economy including high levels of inflation resulting in elevated costs in our economy.
“There is a need for strong cost controls across Departments to enable continuing delivery of commitments in the Programme for Government.
“Reforming processes, generating savings, driving innovation to enhance competitiveness and moderating current expenditure increases to focus investment on capital projects like housing, roads, energy and water is the best way to protect jobs and safeguard the economy in the period ahead.”
ENDS
Notes to Editors:
- The Annual Progress Report (APR) is a European legal requirement: all Member States must submit an APR to the European Council and Commission.
- The main purpose of the APR is for Member States to report on ex post expenditure growth outcomes versus planned expenditure in the previous year.
- The Department produces two macroeconomic and fiscal forecasts each year, a spring forecast with the APR and an autumn forecast with the Budget.
- The baseline forecasts set out in this document were produced during March on the assumption of energy prices moderating over the second half of the year, anticipating a short and fairly contained conflict, with relatively limited lasting damage to energy infrastructure in the Gulf. These forecasts, which cover the years 2026-2030, were endorsed by the Irish Fiscal Advisory Council on 25th March.
The macroeconomic analysis and forecasts contained in this document are based on data available to end-March 2026. The fiscal projections are based on data as of mid-April.