The Fiscal Advisory Council has said the Government has been " to strike a balance between providing support and avoiding adding to inflationary pressures..." in Budget 2023 by following its spending rule.

In a statement this evening, the budgetary watchdog described as "sensible" the Government's decision to temporarily deviate from the rule next year "in view of the very high rates of inflation."

IFAC says the package of once-off cost-of-living supports is "more targeted than previous supports" and determines that "more than half" of the €4.4bn announced, "appears to be in the form of targeted supports."

However, it also highlights that the electricity credits, the double child benefit payment and the extension of VAT and excise reductions on fuel, gas and electricity "are still relatively untargeted."

It warns that not all households can be fully compensated for inflation.

It welcomes the decision by the Government to return to its "Spending Rule" next year but says it should also "stand ready to take additional measures if needed if there are significant disruptions to energy supply this winter."

IFAC also highlights that spending on the public capital programme has only been increased by €800m in line with previous plans and not in response to the level of inflation.

It questions whether this will mean that a lot less will be delivered than planned or whether spending will be revised upwards to take into account higher costs. It also asks if projects may also be deferred.

It welcomes the decision to reestablish the Rainy Day Fund as the Reserve Fund and to put aside €6bn for future downturns. It says this will help "unwind the State's overreliance on excess corporation tax receipts."