Mr. Sebastian Barnes:

As I said, there are exceptions to my textbook story but that is the general principle.

That is why we explicitly say in our report the Government cannot fully compensate everyone, given the country as a whole is worse off. However, it can aim to support some groups. For example, if we were to compensate for the impact of this year's unexpected inflation on public sector pay, welfare rates and pensions, it would cost approximately €2 billion - the €700 million was for one percentage point of inflation, but we have seen a great deal more unexpected inflation than that - to compensate that group fully and no one else would get anything. We can compensate the more vulnerable groups at a cost that is sustainable to society, particularly if we do not provide untargeted help to those who do not need it.

There is another point that is important to understand, and it is somewhat specific to Ireland. We are suffering from higher energy and food prices like everyone else, but we are also benefiting - or, rather, some people are - from a favourable shock to digital and pharmaceutical activities and financial services. Something we explored in the analytical note that was published last week by our economist, Mr. Kevin Timoney, is that wages in those sectors have been growing at a fast clip for a number of years and employment therein has increased a great deal. People within Ireland who happen to work in those sectors or benefit from their spillovers are doing relatively well. That is good for tax revenue, but another group is being hit by the food and energy price shock. This is where choices have to be made - they are inherently political choices - between how these different pieces are put together to achieve the outcome people want.