Minister for Finance Simon Harris has asked his economic advisers to detail the impact on the Republic’s economy of negative scenarios arising from the Middle East conflict and ongoing energy-supply pressures.
Three possible impacts, including worst-case, will be examined by Harris as he finalises his first spring economic forecast in the finance portfolio on Monday.
Against a backdrop of heightened global uncertainty, a departmental team led by chief economist John McCarthy will set out the macroeconomic implications of the three scenarios, including their potential impact on global energy supplies and consequential effects for the Republic.
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The scenarios are expected to outline the extent of disruption to international energy markets and the broader global economy. Moreover, they will also detail how these could shape key indicators such as economic growth and domestic inflation.
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Harris is expected to argue that the State’s fiscal capacity is strong. And he is set to reference the recent fuel-price packages, worth €750 million.
However, he is likely to caution that ongoing global volatility would underscore the need for a sustainable approach to budgetary policy over the medium term.
The analysis will be published on Tuesday following a memorandum to Cabinet by Harris and Minister for Public Expenditure Jack Chambers.
“The Irish economy is in good shape with falling debt, real income rising and strong fiscal buffers in place,” said Harris on Sunday night.
“I have to be straight with the Irish people − our job is not just to plan for today or tomorrow, but to map out and prepare for a variety of global economic scenarios. That is why I tasked my officials with scenario planning so we can best consider a variety of different backdrops in what is a very fluid and volatile global situation.”
Meanwhile, Taoiseach Micheál Martin said a key part of the State’s six-month EU presidency would be expanding energy security and affordability.
Another Fianna Fáil heave that wasn’t
Speaking at the annual Fianna Fáil 1916 commemoration in Arbour Hill, he said no area had affected so many people as the rises in energy and fuel prices. And he added that the contentious packages unveiled by the Government were temporary measures.
“We have been dealing with huge swings in prices and threats to supplies. The programme of both targeted and general actions we have implemented directly represents very significant relief ... We need to get energy prices down long term and this requires both investment and reform.”
He referred to further investment in transport, international connectivity, new energy grid networks, and added that the Coalition would prioritise affordability when reviewing regulations that affect price.
Martin also said he would carry on as Fianna Fáil leader into the next election and “fulfil my mandate”.
He did not consider internal party criticism following the fuel protests as an attempt to remove him as leader. But the Taoiseach acknowledged that it had been a “challenging week”.
“I have a mandate ... I think many people who are now elected were happy that I was leading the charge in that election; and so, that’s my position,” he added.
Elsewhere, President Catherine Connolly will convene the first meeting of the Council of State focused on the constitutionality of a Bill. The council, membership of which was announced last month, will consider the International Protection Bill, which recently completed its passage through the Oireachtas.
