Taoiseach’s economic adviser warns of uncertain winter with ‘lot of risks’

The economic adviser to the Taoiseach has said the State’s financial outlook for the winter is uncertain with a “lot of risks” attached.

Professor Alan Ahearne told a meeting of Fianna Fáil TDs and Senators on Wednesday there was also a strong case for a rainy-day fund at a time when corporation tax returns might begin to decline.

He said the fact that Ireland had the strongest economic recovery in the EU put the State in a good position to withstand upcoming pressures.

At the same meeting, Minister for Housing Darragh O’Brien confirmed that following the publication of Census figures, the minimum number of TDs in the next Dáil will be 171 with a possible maximum of 181.

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In a presentation to the parliamentary party meeting Dr Ahearne said Ireland had achieved an “exceptionally strong economic recovery” after Covid with the strongest jobs rebound in the EU.

However, he added: “The outlook is highly uncertain. There are lots of things to worry about later this year and in 2023″.

He told the parliamentarians it was best to target help at those hardest hit by inflation.

Turning to public finances, Dr Ahearne said that income tax, VAT and corporation tax receipts have been especially strong over the past two years.

The sustainability of corporate tax receipts was a concern going forward, he said and suggested the establishment of a rainy-day fund by Government would be prudent.

Turning to the cost-of-living and inflation he said central banks across Europe were increasing interest rates to cool down increases. He said there was some concerns about financial stability in the euro area.

He continued that the lessons learned from the 1970s was that chasing inflation led to multiple rounds of inflation and there were dangers of inflation becoming “embedded”. He said the best strategy was to target help at those hardest hit by inflation.

In a separate presentation to his colleagues, Mr O’Brien said the party’s focus for the budget would be to support home ownership schemes and help people who were stuck in a rent trap.

Like Fine Gael, Fianna Fáil is signalling it wants to extend the help to buy scheme for first-time buyers, worth up to €30,000.

Mr O’Brien said his Housing for All Plan would provide 9,500 social houses each year as well as 4,000 affordable purchase homes per year, as well as 2,000 cost rental homes.