Colm McCarthy: What does the Summer Economic Statement tell us?

Last week’s pre-budget releases have left the airwaves free for a summer of wrangling and indecision about the Government’s economic policies for 2026 and the longer term.

The revised National Development Plan (NDP) failed to list its project priorities for capital investment beyond a premature commitment to the Dublin MetroLink, for which not even a capital cost estimate is available, while the Summer Economic Statement (SES) has omitted the customary outline of assumptions about the broad economic background.

Nobody knows which capital projects are to be favoured, despite the huge overall commitment in the NDP of €102bn to 2030, while the profound uncertainty about the economic outlook over the next few years has been side-stepped by ignoring it altogether.

Internationally, there are fears of a slowdown courtesy of a Trump-induced tariff war and Ireland is also exposed to a reversal of the corporation tax bonanza from multinationals which has flattered the budget outcomes in recent years.

The NDP was expected to see a reversal of the preference for railways over roads – the Green Party had endorsed a rail investment budget equal to double the amount to be devoted to the road network, but its exit from Government after November’s general election was expected to see the emphasis reversed. So it proved. There was no mention of the two-to-one ratio in the document as released and most of the transport allocation will go on roads.

But just one transport item is actually mentioned specifically, a promise of €2bn, out of the total €22bn for transport, is destined for the Dublin MetroLink, a single and partly underground rail line from central Dublin north to the airport and the suburb of Swords.

The remaining €20bn will cover the commencement of long-delayed inter-urban road projects, including those that fell victim to the huge cutbacks in the capital programme during the years of the Troika bailout.

Road investment has only recently returned to more normal levels and schemes such as the M20 Limerick to Cork motorway and the M4 Dublin to Sligo may finally get underway.

The revised NDP does not, however, contain any list of actual projects, so the lobbying over priorities has only started.

The MetroLink, if it goes ahead, will cost somewhere around €16bn or €17bn, with upper estimates over €20bn, easily the largest single project ever contemplated in Ireland.

The project promoters, an adjunct of the Department of Transport called Transport Infrastructure Ireland (TII), has been unable to offer a narrower estimate.

There is always uncertainty about construction risk, but it is unprecedented for the Government to commit to a project where the costs are unknown.

The Government pretends to be choosing the best value-for-money projects, as required by the Public Spending Code, but the commitment to MetroLink at unknown cost is further evidence that the code has been abandoned

The €2bn allocated will cover TII’s costs and there seems to be a plan to cover the bid costs of unsuccessful tenderers, which would be substantial.

How do you know that the benefits exceed the costs if you have no estimate of costs?

The Government pretends to be choosing the best value-for-money projects, as required by the Public Spending Code, but the commitment to MetroLink at unknown cost is further evidence that the code has been abandoned.

The portion of public capital spending funded from the Exchequer is normally augmented by commercial State companies which fund investment from their own resources, but the new NDP will see explicit subventions from the Exchequer as well.

The electricity companies Eirgrid and Electric Ireland are to get some direct State equity injections, a break with the tradition that the ESB, of which they are the modern-day components, charge customers enough to cover all costs, make a surplus and maintain a balance sheet strong enough to support whatever borrowings are needed.

Uisce Éireann is not so lucky – since the politicians decided that water is to be free, Uisce Éireann has earned annual revenue no more than about half its operating costs, so it must run at a loss and without a standalone balance sheet that would support the sale of bonds in the market as the ESB has often done.

So it gets an annual Exchequer cheque to cover losses and another one to pay for their capital expenditure, a hand-to-mouth arrangement.

Some future government will work up the courage to charge households for water use, as is done elsewhere in the European Union and in every region of the United Kingdom except Northern Ireland.

Correction: In this column last week, I mistakenly stated that the passenger volume restrictions on the the new runway at Dublin Airport had been imposed by Fingal County Council. This is not correct – the responsible agency was An Coimisiún Pleanála, the new name for An Bord Pleanála.

Fingal County Council has however been designated by regulation as the ‘Airport Noise Competent Authority’ for Dublin Airport and will have a future say in that capacity.