Ken O'Flynn (Cork North-Central, Independent Ireland Party)
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366. To ask the Minister for Finance if his Department has conducted stress-testing or scenario analysis to assess Ireland's exposure to a potential economic downturn in 2026 and 2027; whether fiscal contingency plans are in place to mitigate same; and if he will make a statement on the matter. [63588/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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My Department regularly carries out a range of analysis, including scenario analysis, of the Irish economy’s exposure to risks.

The Budget 2026 Economic and Fiscal Outlook notes that risks to the economic outlook are tilted to the downside and that these risks are primarily external in nature. This document includes a risk assessment matrix which identifies key economic and fiscal risks, their likelihood and impact. Some of the key risks identified in this assessment include a further escalation of protectionism and a loss of competitiveness.

Earlier this year, my Department and the ESRI published an analytical paper which assessed the potential impact on the Irish economy of a wide range of tariff scenarios. More generally, as a small open economy Ireland is particularly exposed to external developments. Previous analysis published by my Department shows that in an illustrative scenario where there is a 1 per cent shock to world demand, together with lower foreign direct investment, GNI* would be 1¼ per cent lower over the medium-term relative to a no-shock baseline.

Mitigating the risks to the public finances of any potential future shocks is a central pillar of Government’s fiscal strategy. Indeed, by the end of this year, we will have invested some €16 billion of windfall tax receipts into the Future Ireland Fund and Infrastructure, Climate and Nature Fund.

More generally, the best way to ensure our public finances remain resilient to any future downturn is by running headline budgetary surpluses and ensuring that our income tax and VAT base remains stable.