Finance
Irish central bank governor warns government against over-stimulating economy
Published by Global Banking & Finance Review®
Posted on August 3, 2025
2 min readLast updated: January 22, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on August 3, 2025
2 min readLast updated: January 22, 2026
The Irish central bank warns against over-stimulating the economy, urging the government to reconsider its budget plans amid full employment and potential U.S. tariffs.
DUBLIN (Reuters) -The governor of the Irish central bank has warned the government against over-stimulating the economy in its annual budget in October, saying the country was at risk of being in the "wrong place," in terms of spending.
Gabriel Makhlouf was speaking two weeks after the government published its pre-budget plans, in which it said it would allow day-to-day spending to increase by 6.4%, down from the 8-9% range in recent budgets.
"For an economy operating at full employment, we're adding more stimulus to the economy than it needs – and I would look again at what we're planning to do," Makhlouf told the Business Post Newspaper in an interview published on Sunday.
"I think at the moment there's a risk that we're in the wrong place," Makhlouf said.
The government said that it would trim next year's planned 9.4 billion euro package of tax cuts and spending increases, if U.S. tariffs are higher than the 10% in place at the time of the announcement.
Days after the government released the budget plans in its Summer Economic Statement, the U.S. struck a framework trade agreement with the European Union, imposing a 15% import tariff on most EU goods.
"Hopefully, the Summer Economic Statement is not the budget, and hopefully, by the time he gets there, he will have reflected again on what the trade situation is telling us," Makhlouf said.
(Writing by Conor Humphries; Editing by Toby Chopra)
Gabriel Makhlouf warned the government against over-stimulating the economy in its upcoming budget, suggesting that the country might be adding more stimulus than necessary.
The government plans to reduce next year's budget package of tax cuts and spending increases, contingent on the level of U.S. tariffs.
Makhlouf indicated that the economy is operating at full employment, which raises concerns about the appropriateness of additional stimulus measures.
Following the U.S. trade agreement with the EU, which imposed higher tariffs, there is uncertainty about the economic implications for Ireland's budget plans.
Makhlouf expressed hope that the Summer Economic Statement would not be the final budget and that the government would reconsider its plans based on evolving trade conditions.
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