“Ireland is a first world economy with third world infrastructure,” declared Irish economist David McWilliams on the Financial Times’ Unhedged podcast. It’s a provocative statement, but one that resonates. Unlike the United States, where Keynesian economic principles drive deficit spending to stimulate growth, Ireland’s government operates with one of the largest budget surpluses in Europe. Bolstered by billions in corporate tax revenue from U.S. multinational giants like Apple, Microsoft, and Google, Ireland’s government has the unusual problem of having too much money, with a projected €65.2 billion surplus by 2027.
Yet, even with this immense fiscal wealth, Ireland grapples with deep-rooted societal challenges. The worsening housing crisis, skyrocketing living costs, and insufficient public transportation leave many wondering: where is all this money going? As the government debates how to allocate this surplus — invest in infrastructure, address bottlenecks, or safeguard it for future generations — citizens are left waiting for tangible improvements. Ireland’s paradox is clear: unparalleled national wealth coexists with an infrastructure and social safety net that fail to meet basic needs.
Having too much cash, so much so that it complicates your spending plans, is a unique problem to have, if you could even call it that. Ireland’s budget surplus is a staggering testament to its distinct economic model, standing at €8 billion in 2023 and growing to an additional €13 billion after the European Commission ordered Apple to pay the nation a recovery order in unpaid taxes, the total now amounting to a whopping €21 billion. So how did a tiny nation in the Atlantic get to this point? Economists explain this with several decades of fiscal strategy allowing the government to operate at a constant surplus, effectively transforming Ireland into a magnet for U.S. multinational corporations. This economic shift has its roots in the 1990s, following the fall of the Berlin Wall and the globalisation boom that allowed U.S. capital to flow more freely. With no capital base to begin with, Ireland’s low tax rates (historically 12.5% and now 15%) and cultural alignment with the U.S. made it an attractive alternative to offshore tax havens, which the U.S. government and European Commission had been advising against.
The “double Irish” tax play — a corporation tax avoidance strategy that involves sending profits first through one Irish company and then a second — has allowed certain corporations to dramatically reduce their overall corporate tax rates, including Apple. These corporations now account for a remarkable 25% of the nation’s tax revenue, an unparalleled figure compared to most European nations, where the average is under 10%. It comes as no surprise that Ireland enjoys a surplus of corporate tax revenue, given its unique position: U.S. multinational corporations are drawn to Ireland not only for its low tax rates but also for nearly seamless access to the EU’s 300-million-strong market — an economic scale far exceeding Ireland’s modest population of just five million and offering American companies a strategic gateway for operations and trade. What began as a desperate bid for economic survival has now resulted in a nation overflowing with wealth — a stark contrast to its position just 30 years ago.
While having a massive budget surplus may appear favourable for any government, in Ireland’s context, it has only exposed deep economic imbalances, leaving vital sectors underfunded and public dissatisfaction mounting. Without reinvestment, this wealth does little to bridge the gap between government resources and the lived realities of citizens. Perhaps the most visible symptom of this imbalance is the housing crisis. The average rent for a one-bedroom apartment in Dublin now exceeds €1,800 per month, making the city one of the most expensive in Europe for housing, behind London and Geneva. Homeownership, a hallmark of middle-class stability, has become somewhat of a pipe dream for many, with younger generations finding it especially difficult to enter the housing market. Despite widespread recognition of the problem, with rising rates of homelessness, government action has been slow, and the limited availability of affordable housing continues to push families and individuals out of the city and even the country. Public infrastructure, particularly transportation, further highlights the challenges of a pile of cash left unspent. Ireland’s public transportation system, plagued by limited coverage and capacity, struggles to meet the needs of its growing urban centres, especially Dublin. Overcrowded buses, infrequent train services, and inadequate connectivity leave many with limited to no public transport access, forcing others to rely on private vehicles, adding to costs and traffic congestion.
One solution seems obvious: use a considerable budget surplus to address these pressing national issues. However, opinions are divided on whether to spend the money immediately or save it for future use. Economists in the Department of Planning caution that injecting billions into the economy risks overheating it, particularly in a market already grappling with inflationary pressures. A sudden increase in government spending on public services and infrastructure could lead to higher prices for goods and services, eroding consumer purchasing power and destabilising the broader economy. This perspective has prompted calls for fiscal restraint, with some advocating that the surplus should be handled conservatively to avoid compounding inflation. Ireland’s approach to economic downturns has often been shaped by a narrative of shared moral failings rather than structural mismanagement. Former Taoiseach Charles Haughey infamously declared during the 1980s that Irish citizens were “living way beyond our means,” framing the country’s financial struggles as a consequence of collective overindulgence.
Decades later, during the 2008 financial crash, Finance Minister Brian Lenihan similarly shifted blame away from his government’s catastrophic decisions, remarking that “we all partied” during the boom years. This pattern still manifests itself in today’s political question of what the government should do with its extra cash and its tendency toward more cautious economic policies, even in a time of unprecedented surplus. Conversely, many campaigners argue that failing to invest in public services and infrastructure will only worsen the housing and transportation bottlenecks, driving up costs in other areas. The government’s lack of investment not only diminishes the quality of life for residents but also hampers economic productivity by creating barriers to efficient mobility. Spending could cause inflation. Not spending could cause inflation. The debate now centres on whether prudence or targeted investment will better serve Ireland’s long-term stability. It’s a matter of making a choice and making it fast, as recent prospective U.S. tax reforms threaten to challenge the sustainability of Ireland’s current economic model.
A significant portion of Ireland’s corporate tax revenue (43%) comes from just three U.S. multinational corporations. Such a reliance makes Ireland particularly vulnerable to shifts in global economic trends or policy changes in the United States. With President Donald Trump’s claims of reducing the domestic corporate tax rate to 15%, many corporations could be enticed to repatriate their profits and intellectual property or relocate operations, and Ireland’s fiscal strategy could unravel almost overnight.
The budget surplus is poised to become a defining issue in the 2025 general election. Political parties will likely face immense pressure from constituents to articulate how they plan to either use or safeguard this windfall. For voters, the surplus represents an opportunity to address long-standing challenges such as housing affordability and public transportation. The potential that this surplus represents demands leaders who can navigate the delicate balance between saving for future economic downturns and reinvesting in critical infrastructure and services today. Overly cautious fiscal policies could exacerbate existing issues, deepening inequality and driving more young people out of the country. On the other hand, reckless spending could risk overheating the economy, triggering inflationary pressures that would erode the benefits of the surplus. The election will not only test the economic policies of each party but also their ability to offer a forward-thinking approach that secures Ireland’s prosperity for generations to come. The time for bold, balanced action is now.
