Dr. Kieran McQuinn:

It is a very interesting question. It is an increasingly relevant debate, if you like, in terms of how to deal with the present inflationary situation. In general, from an economics perspective, we do not tend to favour price controls, which are rather crude in terms of what they seek to do and may lead to distortions in the market in general.

We recommend that issues in childcare, housing, etc. need to be dealt with on a structural basis and that the structural root causes of the difficulties in the markets be dealt with, rather than using something like price controls as a mechanism. However, as the situation deteriorates and the upward pressures continue, all policy responses will be on the table for discussion and evaluation.

Measures in the energy market, in particular, are policy responses which are probably more effective at a European level than a domestic level. If we are to go down that route, it is best if we adopt a more European perspective than as far as the domestic economy is concerned. We have seen recent debate about the supernormal profits certain energy companies are making. A well-known economist, Oliver Blanchard, said people should not be surprised. That is what private companies do. They earn supernormal profits if they can. To deal with the situation, we should look at taxing such profits. That has been discussed but should be looked at more at a European rather than domestic level.

We are wary of price controls because, by definition, they can tend to be distortionary in their impact. Deep-rooted structural issues in the Irish economy, whether in housing or provision of childcare, need to be addressed, rather than capping prices which may bring some temporary respite but problems build up over the longer term and stunt the necessary underlying structural reform. That is the concern around implementing those measures. If those responses were to be considered, it is probably more effective to do so at a European rather than domestic level.