Dáil Éireann Debate, Thursday - 22 June 2023
95. Deputy Aindrias Moynihan asked the Minister for Finance what measures are being taken to ensure any policy responses to international inflation do not embed inflationary expectation into the domestic economy, to ensure our competitiveness; the domestic reforms being considered to boost productivity and reduce costs; and if he will make a statement on the matter. [30150/23]
View answerGovernment has responded swiftly and decisively to the cost of living challenge. A number of fiscal supports have been implemented over the past year aimed at supporting businesses and households most adversely impacted by inflation without inadvertently adding to inflationary pressures. For example, Government introduced the Temporary Business Energy Support Scheme (TBESS) to support businesses faced with increased energy bills. The targeted and temporary nature of many cost of living supports are an explicit effort to prevent inflationary pressures being compounded by government intervention.
Despite the magnitude of the inflationary pressures we have faced over the last year, the Irish economy has remained remarkably resilient and competitive. The labour market has performed remarkably strongly, with record-low levels of unemployment and over 2.6 million people in employment. Furthermore, Ireland remains an attractive location for foreign direct investment (FDI), reflecting our highly educated workforce and continued reputation as a stable and pro-enterprise economy internationally.
I am also pleased to report that inflation has passed its peak and is now on a downward trajectory, primarily as a result of significant easing in wholesale energy markets. Despite this, ‘core’ inflation (excluding energy and unprocessed food) has remained stubbornly persistent. As the economy operates at full employment, there is a real risk that a wage-price spiral could emerge which would damage our competitiveness and undermine the productive capacity of the economy.
While the economy has shown remarkable resilience during this inflationary period, my Department is acutely aware of the continued adverse impacts of inflation and heightened price levels on households and businesses. Government continues to monitor risks to the outlook on an ongoing basis and stands ready to take the necessary steps to mitigate these risks.
