Oireachtas Joint and Select Committees
Wednesday, 7 September 2022
Committee on Budgetary Oversight
Updated Economic and Fiscal Position in Advance of Budget 2023: Discussion
Dr. Tom McDonnell:
Of course. It would only benefit that 23% or more than 600,000 people who are in that band. They would be the only ones who would benefit from that. Obviously, it would increase their real disposable income, which would have a positive effect on demand. We have a supply constraint at the moment, so increasing demand is like a wave washing up against it. Inflation will go higher. There is no doubt about that. However, as it happens, higher income households actually currently do not spend all of their income because they do not need to. They are not experiencing the cost-of-living crisis in the same qualitative way and, therefore, the inflationary impact might be lower than it would be if benefits were given to lower income households that have to spend all of that money. The exceptions might be that it might increase house price growth and things such as that, because that is the type of thing that those households might be looking at investing in. It might drive up house prices.
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