A report by economists at the Central Bank says that permanent increases in current expenditure by the government should be balanced by higher taxes.

The report highlights the "significant uncertainty" over how changes to international tax rules will affect corporate tax revenues.

It estimates that revenue could fall permanently by €4.7bn by 2025.

It questions how, given the risk to future tax revenues, it was "notable" that the Government's Summer Economic Statement (SES) did not outline any potential revenue raising measures.

In fact, it highlights that the SES notes that part of the financial resources available to government "could be used for tax cuts."

It says the Summer Economic Statement represents "...a significant revision from April's Stability Programme Update, which outlined a path back to a balanced budget by 2025."

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Deficits, it notes, are now expected to persist over the medium term.

It also says additional spending without offsetting tax increases "...could generate excessive inflationary pressures leading to the emergence of imbalances in the economy."

Another risk it highlights is that pre-pandemic, spending increased by an average of 7% per annum.

It says that if future core spending was to increase at this pace rather than the 5% set out in the SES, then spending would be €1.7bn a year higher again.

The report, entitled 'An Analysis of Medium-Term Risks to the Public Finances' is in the form of an 'Economic Letter' where the authors express their own views.