Written answers

Thursday, 4 July 2024

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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249. To ask the Minister for Finance the extent to which he can encourage consumer spending in a direction that is most beneficial to our economy; and if he will make a statement on the matter. [29078/24]

Photo of Jack ChambersJack Chambers (Dublin West, Fianna Fail)
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Households have faced numerous headwinds in recent years including rising levels of inflation and the associated increase in interest rates. Inflation rose sharply since the pandemic and spiked as a result of the energy price shocks that followed the war in Ukraine. These developments put significant pressure on consumer spending as purchasing power was eroded by higher prices. The associated interest rate hikes also increased mortgage borrowing costs for households.

In response to these pressures the Government provided an unprecedented level of support to households. These temporary measures were essential for insulating households from rising costs, and included tax credits, welfare supports, lump-sum payments, and energy credits. The supports helped to maintain consumer spending and economic activity. Fortunately, inflationary pressure eased from the second half of 2023 onwards leading to recovery in consumer spending in the first quarter this year.

Looking ahead the outlook for consumer spending is positive. As the labour market is expected to continue to perform robustly, the pace of growth in nominal wages is expected to outpace inflation, supporting real wage growth and in-turn consumer spending. In its spring economic forecasts, the Department of Finance projected consumer spending growth of 2½ per cent this year, increasing to 3 per cent next year.

Going forward, this Government remains committed to careful budgetary management. We will continue to strike the right balance, ensuring that spending is both sufficient and sustainable, meeting the needs of today without compromising the future needs of our people in the years to come.


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