The cabinet is set to have a further €2bn to spend next year because of changes to the way tax is levied on entrepreneurs’ pensions, sources have told the NRC.

Ministers have yet decided how to spend the windfall but there is considerable support for using it to shore up pensioners’ spending power, the sources said.

The last macro-economic report by the government’s CPB think-tank said pensioners are heading for a 1.3% cut in disposable income next year.

The government is due to present its 2017 spending plans in September. There will also be a general election next March.