Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

First, the Deputy did not actually call for anything of the sort that I proposed in the House yesterday in terms of the comprehensive approach I and the Government want to take to what is, without question, a very serious issue for the Irish economy and the European economy. That is manifested in the main at the moment by inflation. I said yesterday that we have had two, if not three, shocks to our economic model. The first was Brexit. We dealt with that, as a country, as best we could. The second was the pandemic, which was a once-in-a-century event. Thankfully, because of the economic measures the Government took to protect jobs, incomes and businesses and to keep them intact, we have bounced back very significantly as an economy, largely speaking, in emerging from Covid. The Central Bank's report today confirms that. Government initiatives in the teeth of a major crisis, that is, the pandemic, worked, notwithstanding that the ending of the emergency phase of the pandemic has created a huge inflationary cycle. Add a terrible war, the war on Ukraine, and energy prices have exponentially grown and risen. The sanctions the European Union, the United States, Canada and other democracies have imposed on the Russian Federation within themselves create economic impacts and shocks, some of which we are not clear on yet. The only thing from now to the end of the year, as far as I can see, is uncertainty. I would not understate the economic recovery in Ireland.

I fully accept the enormous pressures inflation is putting on households. We are very concerned about those on low incomes. Hence, we increased the fuel allowance from €630 when we came into government to €1,039. When the €200 cut in electricity bills is added, that is €1,239, up from the base of €630 when we came into office. Other aspects of the economy also illustrate the point I was making yesterday. The Central Bank is saying inflation could go to 6.5%. It has revised downwards growth forecasts. It expects the jobs market to remain strong with an increase in employment of about 88,000 this year.

The Department of Finance is preparing the spring forecasts.

We had the highest employment growth in the European Union last year, with the number of people work soaring by nearly 230,000 to just above 2.5 million, marking a record high and already surpassing our target for 2024, which was contained in the economic recovery plan. Employment has increased for all age groups and across all geographic regions. GDP went up by about 13% but it is modified domestic demand that we are focused on and that grew by 6.5%, which is now 7% above the pre-pandemic level. The unemployment rate is at 5.2%, which is close to full employment. Those are the plus points but there is one huge negative, namely, inflation. The challenge for us is not to undermine progress in other parts of the economy. I am saying the best way to do that is work with the social partners, trade unions and employers on the pay policy dimension to this, which is important as there are tax, social welfare, income protection and climate change implications. Then there is the issue of the costs for people on low incomes and for those who are going into work every day. In the €800 million package we put in place since the budget we have already reduced transport and medical costs. That is an intelligent way to go about this.

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