The Government aims to reduce the deficit to 1.2% of GDP by the end of next year, according to the Minister for Finance.

In his Budget 2016 speech, Michael Noonan said the forecast deficit for 2015 was set to come in at 2.1% of GDP – below the original target of 2.7%.

The country’s debt levels are also set to fall next year, reaching 93% of GDP by the end of 2016.

This is down from a forecast of 97% for 2015, though Mr Noonan said when cash and liquid assets are taken into account, the country’s net debt is set to reach 80% this year. 

Mr Noonan said the Department of Finance was forecasting that the economy would grow by 18% in nominal terms between the end of 2014 and 2016, with tax revenue rising by €7.2 billion.

Gross voted expenditure was set to rise by €2.25bn in the same period.

Mr Noonan said  talk of an excessively expansionary Budget was “well off the mark” as a result, as the total package he was announcing was worth €1.5bn.

That would include €750m in tax reductions, with the only tax increase set to be a 50c rise in the excise duty on a packet of 20 cigarettes.

This, Mr Noonan said, would raise €61.4m in a full year and would enable the funding of new initiatives in the health sector.