Budget plans are overshadowed by fears of no-deal Brexit
There is limited scope for new spending and tax cuts in the Budget, due to the overhanging threat of Brexit, the Finance Minister will warn today.
Sources told the Irish Independent the Summer Economic Statement will point to a potentially worrying slowdown in jobs growth as the uncertainty of Brexit looms.
Paschal Donohoe will present a 'central case scenario' whereby the Government will be in a position to introduce a budget broadly similar to last year.
However, Cabinet ministers will also be told they may need to dramatically scale back their expectations if the future of Brexit remains unclear into September.
This would see a squeeze put on potential new funding for childcare, health and housing.
Sources say Mr Donohoe has told ministers he plans to undertake preliminary planning for the two budgets.
By mid-September he will have to choose which approach to adopt ahead of Budget Day on October 8. The UK is currently due to leave the European Union with or without a deal on October 31.
There is some concern at Cabinet level that the Finance Minister will stick with his initial budget even if the course of Brexit changes dramatically in the following three weeks.
But a source said the financial difference in the two budget scenarios being considered by Mr Donohoe is "significant".
Fianna Fáil's finance spokesman Michael McGrath has written to the minister urging him to explore a third possible approach.
Mr McGrath warned that "ongoing Brexit uncertainty presents real problems in the context of preparing the most appropriate Budget for the country at this time.
"If the Budget is not based on a 'no-deal' Brexit and that is what subsequently happens, it will be important to have sufficient headroom available to be able to provide targeted supports to the sectors of the economy worst hit by Brexit."
Just as Mr Donohoe publishes his economic update, two leading economists are set to issue stark warnings about the risks to the public finances.
Limerick University Professor Stephen Kinsella will tell the Oireachtas Budget Oversight Committee that the Government risks having to implement several swingeing austerity budgets in the near future if it continues with its current spending plans. He will also say that the country's dependence on "volatile" tax revenues such as corporation tax should be causing concern.
Economist Colm McCarthy will tell the same committee that last year's balanced budget was achieved "by accident" after higher than expected corporation tax returns covered the overspend in health.
He will argue that Ireland should scrap VRT on vehicles and raise road tax before the next economic downturn and stop spurning the chance to put wider revenues on a stable basis.