Pat Casey (Fianna Fail) | Oireachtas source

I welcome the Minister to the Seanad Chamber. He has always made himself available to the House. I welcome the opportunity to discuss Ireland's economic outlook. We are at a critical juncture for our economy and global trade. It is essential that we approach these challenges from a position of strength and resilience. Over the past few years, Ireland has demonstrated remarkable resilience in overcoming various economic challenges. Since 2020, over 600,000 jobs have been created, bringing the total number of people at work to nearly 2.8 million, the highest level in our country's history. Despite the significant challenges and economic uncertainty we face in the short and medium term, we must respond carefully and responsibly at national and EU levels. Enhancing our competitiveness, supporting diversification and innovation in our enterprise sectors and investing in our national infrastructure are crucial to maintaining Ireland as an attractive location for investment.

The baseline forecast presented in the annual progress report was produced in March assuming no introduction of transatlantic tariffs. These forecasts, endorsed by the Irish Fiscal Advisory Council, indicated that modified domestic demand is set to grow by 2.5% this year, a downward revision of almost 0.5 percentage points from the autumn forecast, as the Minister pointed out. For next year, MDD growth of 2.8% is anticipated, a slightly downward revision of 0.2 percentage points relative to the IFAC forecast. Employment is expected to continue expanding, albeit at a slower rate than last year. The labour market forecast is to see employment increase by 1.75% this year and around 1% next year. This translates to approximately 25,000 fewer jobs compared with the baseline scenario by the end of 2026. While this is a cause for concern, it is also important to note that the labour market is resilient and continues to grow.

The most pressing economic threats are undoubtedly external in nature. The shift towards tariff barriers may not be temporary but could persist permanently, affecting Ireland's long-term growth prospects. Given the significant change in the global tariff landscape in recent weeks, the annual progress report included the scenario again, as the Minister pointed out, that attempts to incorporate the impact of these tariffs. In this scenario, while the domestic economy is still expected to grow, there is a downward revision of 1.5 percentage points by the end of 2026 relative to the baseline scenario. However, it is difficult to make confident predictions regarding trade decoupling and a weakening of transatlantic relationships. The Department of Finance is forecasting a general Government surplus of €8.7 billion for this year, equivalent to 2.6% of our national income. However, as the Minister pointed out, our public finances remain exposed to potential transient windfall corporation tax revenues. To prepare for the future, the Government has established the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. These funds will help us plan for the future without relying on temporary revenues for permanent spending. The Government has also committed to using the funds from the recent EU court ruling to invest in infrastructure, particularly in housing, energy, water and transport. As Senator Joe O'Reilly pointed out, we have an ideal opportunity now to plan the future of our country but we must align water, transport and energy to where our housing is going to be delivered. Thanks to careful financial management, we are now in a strong position to face the upcoming challenges. It is important to continue with a balanced and sensible budget policy during these uncertain times.

The United States is a crucial partner for Ireland with deep ties that go back before both countries' independence. Our modern relationship includes a strong economic connection. However, the new US Administration's approach to global trade has created a lot of uncertainty. Ireland thrives on open and fair trade. We believe in a rules-based international order. Unilateral actions and tariffs are not the solution; dialogue is. Trade wars hurt everyone involved - those who start them, those who respond, consumers and businesses. The EU is a fair and reliable trading partner. If there are trade issues, we should resolve them through negotiations. We welcome the 90-day pause for talks and hope for a resolution. Recent events have shown how fragile global markets can be. Even if the current issues are resolved, things will not go back to how they were. Ireland has benefited from a globalised world and we must adapt to a more uncertain future. We will continue to support an ambitious global trade agenda. Trade brings economic benefits, lifts people out of poverty and contributes to a stable world. We will also work with partners to make the EU more self-reliant. The EU needs to take more responsibility for its welfare and prosperity, improve competitiveness and ensure security for its citizens. While Ireland's economic outlook has challenges, it also has opportunities. By managing our finances wisely, supporting fair trade and investing in our future, we can navigate these uncertain times and ensure a prosperous future for all.