Cost of living: Energy price caps would pose ‘risk’ to economy, Donohoe warns

Budget will ‘put money back in pockets’, but will not be panacea for all cost-of-living problems

The Cabinet will not bend to calls from opposition benches for energy price caps to be introduced in order to cushion the cost of living crisis, because doing so would carry too much of a “risk” to the economy, the Minister for Finance Paschal Donohoe said on Saturday.

The minister pledged that he would not drop the ball on Budget 2023, but he warned it would not be a panacea for the cost-of-living crisis. He was speaking at a Fine Gael business conference at Thomond Park in Limerick, ahead of Saturday afternoon’s cost of living protests in Dublin.

Ruling out energy price caps in the budget, Minister Donohoe said: “Any measure that we bring in needs to be affordable and sustainable, and should not be a source of new risk, and we can see significant difficulties with a cap idea.”

“You are in effect requiring the taxpayer to take on all of the cost regarding the price of something that is currently uncertain,” he said.


While budgetary measures will “put money back in the pockets of people”, Minister Donohoe said he would not drain the country’s funds surplus that has been built up due to the government “collecting more money in taxes than we are currently spending”.

“There will always be demands on us to do more and to spend more but we are in really uncertain times, we are dealing with a crisis caused by a huge war in Europe and we cannot be sure who long this will go on for,” said Mr Donohoe.

“This is why we want to ensure that we have the ability to continue to respond back throughout 2023, if things get more challenging or if we have to deal with new risks,” he added.

Tánaiste Leo Varadkar acknowledged “people are worried and are seeing their incomes eroded by high prices”, but he promised, “they will see on (Budget) Tuesday a very significant intervention by government to help people and families with the costs of living, (they) will see the results of that within weeks, but it wont just be one-off measures, there will be help throughout next year”.

Responding to The Irish Times report on Saturday of a row brewing over healthcare spending, the Tánaiste said, while “negotiating the health budget is always a real challenge every year”, it was “absolutely the intention of the government to extend (free contraception) to women over 24″.

He continued, “I should say that new scheme has only just been introduced in the last few weeks so I wouldn’t expect that it will be expanded in January or February (2023), but certainly through the course of next year.

“You’re going to see significant increase in the health budget next year, you’re going to see more money for more staff and development - will it be everything we would like to do? No, but unfortunately that will never be possible,” he added.

The Tánaiste told the conference of invited small to medium business owners they would not be forgotten in Tuesday’s Budget: “We are not going to allow viable businesses go to the wall during this period of high energy prices which hopefully won’t last too long, although we need to plan for the possibility that it might be prolonged.”