BY JOHN ELLIS, FINANCIAL ADVISOR
Around the world leaders are warning about a looming debt crisis. Last year Germany’s leader Friedrich Merz pointed out that countries like France, Italy, and Spain owe more money than their economies make in a full year. France’s government collapsed last year while trying to cut spending by €60 billion to fix their budget mess.
We could add the UK to that list with Keir Starmer dealing with internal strife in his own party as they try to get their finances under control. They fear another market panic like the one that ended Liz Truss’s brief time as prime minister in 2022.
Then there is the US, where things look problematic. Donald Trump’s huge tax cuts, the biggest ever, are expected to add at least $3 trillion to America’s already massive $37 trillion debt. Ray Dalio, who runs the world’s biggest hedge fund and authored a book called How Countries Go Broke: The Big Cycle, says the US is at a turning point. By 2026, just paying interest on that debt could cost over $1 trillion a year. This huge debt is like a heavy weight on the US risking its spot as the “world’s main economic safety net.”
But in our Department of Finance things are relaxed! The issue is not finding money but deciding what to do with all the extra cash coming in. Since 2015 Ireland has collected €156 billion from company taxes, including €11 billion from the Apple case last year. Another €30 billion is expected this year all coming from big US companies like Apple, Google, and Microsoft moving more of their profits here because of crack downs on tax loopholes. Of that only €16 billion, less than 10%, will be put away in the Infrastructure Climate and Nature Fund (ICNF) and the Future Ireland Fund (FIF) by the end of 2025.
What happened to the rest? According to the Irish Fiscal Advisory Council (IFAC) €27.2 billion went to pandemic aid and €7.7 billion to ease living costs in recent budgets, totalling €34.9 billion. The government says it was more like €47 billion with further funds covering health costs and other services as Ireland’s population grew 15% to 5.4 million since 2015. Paschal Donohoe says this spending kept the economy strong with unemployment at a low 4% for decades and held national debt at €218 billion.
Still, experts like IFAC and the International Monetary Fund (IMF) say Ireland should hold back more. They are concerned the tax money might not last forever especially if big companies leave due to trade issues or US tariffs.
IFAC suggests simple steps: plan budgets over time, set rules for spending, consider future problems like an ageing population, climate change and save more while times are good. Ireland’s tax windfalls currently give us a buffer from global debt fears, but we need to be sharp by saving more and spending wisely thereby keeping things steady for the long haul.
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