Dáil Éireann Debate, Thursday - 5 October 2023
214. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which economic or fiscal policy here continues to be conducive to good and careful management of the economy; and if he will make a statement on the matter. [43437/23]
View answerDespite facing substantial economic headwinds over the past year, the Irish economy has proven to be remarkably resilient. This has been reflected in strong domestic economic growth in the second quarter, with both modified domestic demand (MDD) and personal consumption growing by close to 1 per cent.
Government supports have clearly played a key role in helping households to weather the recent economic shocks. By responding swiftly and decisively to the cost of living pressures and providing €12bn (or 4½ per cent of national income) in supports over the course of this year and last to households and businesses, Government has helped to mitigate the impact of inflationary pressures with a focus on assisting those most in need.
Despite our economic position remaining strong at present, Government is fully aware that significant challenges remain on the horizon, as capacity constraints in both the housing and the labour markets become increasingly binding. Downside risks to the global economy are to the fore with growth is slowing in some of our main trading partners, which could have knock-on implications for Irish exports.
Against this backdrop, Budget 2024 will once again need to strike the right balance. This will mean making sure the actions government takes are affordable, sustainable and to the greatest extent possible, targeted at those who need them most. It is essential that fiscal policy does not become part of the problem and add to inflationary pressures.
Looking beyond the short term, research by my Department has highlighted that the pace of growth is forecast to moderate over the medium term. The main driver of this slowdown in growth will be Ireland’s rapidly ageing population, which is expected to constrain the supply capacity of the economy.
In recognition of the burden this will place on public finances, work is well underway on the establishment of a long-term savings vehicle. My Department has published a paper titled “Future-proofing the Public Finances – the Next Steps”, which highlights some of the merits of establishing a long-term public savings vehicle in Ireland. The establishment of such a fund could contribute to meeting future budgetary pressures e.g. population ageing and the climate and digital transitions.
