Paschal Donohoe focuses on risks in opening up dialogue on Budget 2023

Treasury Secretary Paschal Donohoe has hinted at risks to economic growth as the government grapples with next year’s budget.

So many of the risks that we identified as potential a few months ago are now the ones that are materializing and that we need to deal with,” Mr Donohoe told the National Economic Dialogue at Dublin Castle on Monday.

In April, the government forecast the domestic economy would grow 4.2 percent this year (and 3.9 percent in 2023), while gross domestic product — including multinationals — will grow 6.4 percent this year and in 2023 would grow by 4.4 percent.

In May, the European Commission forecast that Ireland’s GDP would grow by 5.4 percent in 2022 and 4.4 percent in 2023, while the OECD forecast GDP growth of 4.8 percent for this year and its forecast to 2.7 percent for the next year.

The International Monetary Fund continues to forecast Irish GDP growth of 5 to 6 per cent over the next two years.

While Mr Donohoe said the government “would not stand by as these types of risks develop,” he insisted spending must be reined in to maintain the country’s creditworthiness when borrowing costs start to rise.

“We can help, but we cannot confront and isolate ourselves from all the changes that are happening, and we have constraints and limitations on the choices we need to make.

“The era of Covid, when we could borrow so much for so little money, is now over.

“This need to ensure our reputation as a country that can borrow at affordable rates will be so important in the period ahead.”

The Taoiseach also dampened expectations of a budget giveaway, insisting the government would not chase inflation “month-to-month.”

Micheál Martin insisted that the upcoming budget will be a “cost of living budget” and that fuel security is the government’s top priority as Russia threatens gas supplies to Europe.

“We have to accept that the winter period could be the most significant difficult period of this crisis so far,” he said of Russia’s moves to use energy as a “bargaining tool” to “pressure” the EU.

“However, our resources are not limitless, nor are our capacities as a small country,” he told the National Economic Dialogue, a key step in the budget process.

“We must prioritize and carefully manage our resources while ensuring we protect the most vulnerable.

“While we can, must and will continue to help, we cannot alleviate the full burden of inflation.

“Our priority will be to balance the rising cost of living against the risk of exacerbating the same inflationary pressures.”

He brushed off questions about putting corporate tax revenue into a bad-time fund, saying the “immediate priority of this year’s budget will be the cost of living”.

The National Economic Dialogue lasts all day. Paschal Donohoe focuses on risks in opening up dialogue on Budget 2023

Fry Electronics Team

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