Dáil Éireann Debate, Thursday - 22 June 2023
215. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which provision continues to be made to ensure adequate safety measures to safeguard the fundamentals of the economy in the future; and if he will make a statement on the matter. [30443/23]
View answerDespite the significant headwinds faced over the past year, the fundamentals of Ireland’s economy have proven to be remarkably strong. In the first quarter of the year, modified domestic demand (MDD) grew by 2.7 per cent. The broad based nature of this growth is encouraging, with both consumption and investment contributing to robust growth over the first quarter of the year despite substantial inflationary headwinds. Personal consumption grew by 1.7 per cent on a quarterly basis, reflecting strong labour market conditions, with over 2.6 million people at work and an unemployment rate at historically low levels.
Government supports have played a key role in assisting Irish households as they weathered the impacts of recent economic shocks. By responding swiftly and decisively to the inflationary challenge and providing €12bn in cost of living supports, government has helped mitigate the impact of inflationary pressures on both businesses and households.
Over the medium term, it is anticipated that the Irish economy will face a number of significant challenges with a lower growth outlook expected in the second half of the decade due to the rapid ageing of our labour force. Indeed, by 2030, age-related expenditure alone is expected to be €7-8 billion higher than it was at the start of the decade, while other structural changes including digital and climate transitions will also have implications for the economy and the public finances.
The Government is taking steps to ensure that adequate safety measures are in place to protect the fundamentals of the Irish economy as we face the aforementioned challenges and any other obstacles that may arise. A scoping paper entitled Future Proofing the Public Finances – the Next Steps was recently published by the Department of Finance outlining the merits of establishing a long-term public savings vehicle. Such a savings vehicle would earmark windfall corporation tax receipts for the purpose of helping to meet future budgetary pressures.
Through the National Development Plan, we are putting in place the vital public infrastructure to meet the needs of our society. With this ambitious expansion in capital infrastructure, the Government will boost the productive capacity of our economy and deliver much needed housing investment. This in turn will support long term and sustainable growth in our economy.
