Tánaiste Leo Varadkar is calling for a “comprehensive anti-inflation strategy” to deal with rising prices, which could “last for years,” he said.
His strategies should include tax indexing, childcare subsidies, “substantial” welfare and pension packages, reduced insurance costs, and increased social and costly rental housing.
“I believe the inflation surge is not temporary,” he told the National Economic Dialogue. “It can last for years. It’s calm and slow, but it doesn’t quickly return to very low inflation.
“The government can do more by helping the Irish people reduce some of the fundamentally high costs they endure.”
But he said there are “limits” to what the government can do to offset rising energy costs.
Treasury Minister Paschal Donohoe has hinted at risks to economic growth as the government struggles with next year’s budget.
“Many of the risks we identified as potential months ago are current and will have to be addressed,” Donoho told the same event earlier at Dublin Castle. ..
In April, the government predicted that the domestic economy would grow 4.2% this year and 3.9% in 2023, while gross domestic product would grow 6.4% this year and 4.4% in 2023.
Since then, both the European Commission and the OECD have adjusted their forecasts, lower than the government’s April forecasts.
Mr. Donoho said the government “will not passively wait for this type of risk”, but as borrowing costs begin to rise, spending will be curtailed to maintain the country’s creditworthiness. Insisted that it was necessary.
“We can help, but we cannot stand up to all the changes in progress and isolate ourselves. We are constrained and the decisions we need to make are limited.
“The days of Covid, where we could borrow a lot in just a few moments, are over.”
The government expects a small budget deficit this year and a small surplus in 2023.
The prime minister also weakened expectations for a free gift budget, arguing that the government would not track inflation “monthly.”
Micheál Martin argued that the next budget would be a “living budget” and warned that next winter “can be the most difficult time of the crisis so far.”
He said the government should prioritize those who are most vulnerable to price increases and be careful not to push up living costs by injecting too much cash into the economy.
“Our priority is to balance rising living costs with the risk of exacerbating these same inflationary pressures.”
He also wiped out questions about getting corporate tax receipts into the rainy day fund, saying, “The immediate priority of this year’s budget will be living expenses.”
National economic dialogue is an important step in the budgeting process. Then next summer’s economic statement will be released.