David NcNamara: Ireland exposed to oil shock but has buffers to soften the blow

Continued surge in corporation taxes means the Government has a war chest if energy shock endures

Tanaiste and Finance Minister Simon Harris at Government Buildings. While Ireland is exposed to energy price shocks, the continued surge in corporation taxes means the Government has a war chest to dampen the effects. Picture: Brian Lawless/PA

As outlined in this column last week, the current conflict in the Middle East raises the risk of a fresh inflationary shock to the global and Irish economies, which if sustained could lead to a downturn later this year.

In 2022, post the invasion of Ukraine, the economy faced a simultaneous energy price and confidence shock. While this did significant damage at the time, in general, a European recession was avoided outside of the highly exposed German economy. Up until now, the ramp up in energy prices is less than was seen in 2022, particularly for gas prices which remain a fraction of the 2022 peak. However, Brent Crude has broken through the key $100/barrel in the week since the attacks on Iran, compared to a peak of $130 reached following the invasion of Ukraine.