The Government predicts the domestic economy will grow by 3.3% this year and 2.3% in 2026.
Outlining the Budget 2026 package, Minister for Finance Pascal Donohoe said domestic activity is expected to be supported by "continued strength in our jobs market".
He said a further 63,500 jobs are expected to be created in the economy next year, with the State forecast to stay in full employment "over the coming period".
The Government also expects inflation to remain at around 2% next year.
Budget 2026 will contain a smaller tax package than previously signalled, which Minister for Finance Pascal Donohoe said was to "facilitate additional spending in targeted supports for the most vulnerable".
Outlining his budget package, the minister said it would represent a total of €9.4 billion.
That will be made up of €8.1 billion in public spending, with €1.3 billion allocated for tax measures - including €681m on the VAT reduction for food businesses - €150m lower than previously indicated.
He said inflation has moderated, and so the size of the budget must moderate too.
Minister Donohoe said this will see one-off measures replaced by more targeted and permanent supports.
Government is forecast to run a surplus of €10.2 billion this year, with that falling to €5.1 bn in 2026, with billions to be put towards the State's two long-term savings funds.
Minister Donohoe said these funds are projected to be worth €24 billion by the end of next year, growing to €40 billion by the projected end of the Government’s term in 2030.
