Bernard Durkan (Kildare North, Fine Gael)
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215. To ask the Minister for Finance the degree to which measures taken in budget 2023 will continue to ensure economic stability; and if he will make a statement on the matter. [56041/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Following the full easing of pandemic-related restrictions earlier this year, economic activity rebounded strongly with little, if any, evidence of permanent ‘scarring’ to the economy. However, the invasion of Ukraine and Russia’s weaponisation of energy supply has triggered a large energy price shock and undermined global economic prospects. Inflationary pressures have risen sharply and remained elevated over the last number of months, with an annual inflation rate of 9.6 per cent recorded in October. This has reduced the purchasing power of households and squeezed firm margins. These effects have slowed prospects for economic activity generally. The Department has revised down its forecast for Modified Domestic Demand growth by -2¾ percentage points next year, with growth of around 1¼ per cent now expected.

Against the backdrop of a highly inflationary environment, Budget 2023 was focused on providing relief to households and firms without making the inflationary situation worse. The Budget package for 2023 amounts to €6.9 billion. In addition to this, we have provided for a one-off package of direct cost of living supports of €4.1 billion, most of which will be implemented in the fourth quarter this year. While this brings the total size of the Budget package to €11 billion, the temporary nature of the deviation from our five per cent expenditure growth rule and the one-off nature of the cost of living supports will ensure that policy does not compound the inflationary problem.

Amongst the cost of living measures announced, Budget 2023 includes three energy credits of €200 each, a €500 tax credit for renters and the Temporary Business Energy Support Scheme (TBESS) to assist businesses with their energy costs over the winter months. Further cost of living measures implemented include an increase in income tax credits and an adjustment of income tax rate bands to reduce the tax burden on middle-income earners.

My Department is confident that the measures taken in Budget 2023 will continue to ensure economic stability. We have struck the right balance between supporting those most in need and avoiding exacerbating inflationary pressures. The one off and targeted nature of these cost of living supports underpins the balanced and sustainable approach to the measures implemented in Budget 2023.