Tánaiste Simon Harris has said he is becoming more concerned about the inflationary impact of the war in Iran and the Gulf region on the wider economy, with no signs of de-escalation.
Speaking on Friday after a UK-Ireland summit at Fota House in Co Cork, the Minister for Finance said officials in his department had repeated that the impact of the war would depend on the “length and depth of the conflict”.
“Now two weeks in, with no signs of de-escalation, I am becoming more concerned around the inflationary impact of this war on the global economy, on the Eurozone economy and on the Irish economy as well,” he said.
The longer the war went on, Harris said, the less likely it was to be confined to one sector, such as fuel or home heating oil prices.
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“And that is a cause of significant concern, I think, for all European governments right now, including our own,” he added.
“If this is a conflict ... that goes on for a relatively short period of time, the economic impact will be relatively benign. If this is a conflict that becomes more entrenched and goes on for a sustained period of time, the economic impact will be much more significant,” he said.
However, the Fine Gael leader would not be drawn into committing to financial supports to ease the impact on households or businesses, emphasising the “extraordinary volatility” of the situation.
“What I need to do as finance Minister, working closely across Government is to make sure that any economic medicine the economy may require is the correct prescription. And to do that, we need to see where the next few days bring us.”
Harris reacted sharply to comments from the fuel industry, which has been calling for the Government to cut taxes on its products in order to bring down the cost to consumers.
Asking how petrol stations close to each other could charge dramatically different costs for fuel, he said: “There are serious peculiarities, I think, and that’s a diplomatic term, in relation to pricing structures that we’re seeing on the forecourts.
“Let’s not just take the word of industry lobbyists here ... the people of Ireland can see with their own eyes,” he said, adding he had a “funny feeling” that prices would not be as quick to decline when wholesale oil markets calmed.
“Government rules nothing out in terms of further legislative action that may well be required to beef up and give further powers to the CCPC [Competition and Consumer Protection Commission].”
Harris said the Government would assess economic data before deciding on the appropriate course of action.
