Dáil Éireann Debate, Thursday - 16 July 2020
79. Deputy Bernard J. Durkan asked the Minister for Finance the direction from which he expects to see the greatest challenges to the economy here in the future; and if he will make a statement on the matter. [16452/20]
View answerMy Department continuously identifies and monitors possible risks to the Irish economy, and has outlined many of the key challenges that our economy faces in the recent Stability Programme Update (SPU) published in April.
Some of these key challenges and risks to the economy include, firstly, the risk that the slowdown in both domestic and global growth due to the impact of Covid-19 will become more prolonged, with the possibility of scaring effects in the labour market or a second resurgence of the virus which would mean a return of some containment measures. Indeed, the Covid-19 shock to the economy is without historical precedent and, as a result, there is a great deal of uncertainty surrounding the both the magnitude of the economic impact and the subsequent economic recovery.
Secondly, a key external risk identified is the potential for the outcome of Brexit at the end of this year to be more severe than initially expected, with increased uncertainty surrounding the precise nature of the future trading relationship between the EU and the UK.
Thirdly, continued and increasing geopolitical uncertainty has the potential to disrupt growth in key regions and generate headwinds for output and employment in Ireland.
A fourth key risk identified in the SPU is an increase in protectionism, including increased tariffs on EU-US trade, could have a detrimental impact on living standards. Given Ireland’s position as a small open economy with a high degree of integration in global value chains, any further disruption to trade or a slowdown in global growth would have a disproportionate impact on the Irish economy.
It is important to note however that as many of these risks to the economy are external in nature and largely beyond our control, the best way we can mitigate against them is through prudent careful management of the public finances and by focusing on competitiveness-oriented policies. Indeed, in the forthcoming July Stimulus Package and National Economic Plan to be published alongside the Budget in October, the Government will demonstrate its commitment to bringing Ireland out of the worst of this current economic downturn. Getting people back to work will be the top priority in this regard.
