The Government has received the informal blessing of the Irish Fiscal Advisory Council for its outline budget plan but the body also warns against any move to increase the package.

Its intervention is a boost for the Coalition as the council, which has statutory powers to monitor the budget, has criticised policy in the past.

In a pre-budget statement, it said the proposal to expand the budget by between €1.2 billion and €1.5 billion “is within the range of prudent policies from an economic perspective”.

At the same time, it noted the plan was at the higher end of acceptable range and called for “continued policy vigilance” to reinforce the economy and the public finances against potential adverse shocks.

Key strands

The Government set out its proposal for an expansionary budget package of up to €1.5 billion in the April spring statement, key strands of which were later criticised by council chairman Prof John McHale.

Although the council said in June that the original plan breached EU and domestic guidelines, its new statement cites data revisions and updated projections due on budget day to say the eventual package “may” show compliance.

The council insisted it was crucial for the Government to ensure compliance, and it warned against any temptation to deploy surging tax revenues to go beyond a €1.5 billion package in the budget.

The council has asked for a “realistic” medium-term plan on budget day.