Michael McGrath is urging energy companies to pass lower costs on to consumers

The finance minister has said he will heed calls from the European Central Bank to withdraw cost-of-living support, but that extending the measures is a national decision.

We also asked energy companies to pass lower costs on to consumers.

“Governments need to make decisions that are right for their respective countries,” Michael McGrath told reporters on Friday morning when asked about the ECB’s call.

“We then have to look at the bigger picture and see what we can afford and what is reasonable – and also consider what the ECB is saying.

“We have to consider the reality of the cost of living pressures that households face in their day-to-day lives and that will be the critical issue for me.”

He said his department is looking at the inflation rate, the cost of the measures and “different timeframes for extending different supports”.

He said the government’s focus is on supports that expire at the end of this month, including lower fuel taxes and VAT, the €200 household energy credit and the €1.2 billion business energy support scheme.

He said the government will be “careful not to do anything that increases inflation or halts or slows the fall in inflation,” and he hopes consumers will feel the recent drop in wholesale oil and gas prices soon.

“It may take a while, but we want consumers to benefit from the cut in wholesale gas prices at the earliest opportunity,” he said.

“For the companies affected, these are economic decisions, but the sooner we can relieve consumers, the better.”

He was speaking as the Treasury Department released its sixth annual Debt Sustainability Report, which said the national debt was still too high.

The national debt rose to 226 billion euros by the end of 2022, compared to 203 billion euros just before the pandemic.

That corresponds to 86 percent of the national income or around 44,000 euros for each inhabitant of the country.

The ministry’s debt report found that a 1 percent rate hike by 2025 would not significantly affect government debt in the short term because it was borrowed at low interest rates for extended periods.

However, the report says that a worst-case scenario involving the “windfall” of corporate taxes – which fell to around 10 billion last year – could rise to 25 points after a deeper slump in growth.

However, Mr McGrath expressed optimism about the prospects for the Irish economy this year after fourth-quarter gross domestic product beat expectations and the International Monetary Fund recently upgraded its global growth forecasts.

“I think you can say that the mood has improved. It’s certainly less pessimistic than it was a few weeks ago,” he said.

“We expect the Irish economy to grow in every respect this year and that employment levels will remain essentially high and unemployment low and this is absolutely crucial for the health of the economy and for households to have the best prospects offer,” he said.