Taoiseach rules out early budget ahead of 'difficult' winter

Mr Martin said the Government is trying to "avoid" an era of stagflation but says lessons from the recessionary days of the 1970s show that chasing inflation leads to even higher price rises. File picture

The Taoiseach has ruled out an early budget in response to rising inflation and the spiralling cost of living.

Micheál Martin has also warned of a "difficult" winter ahead, especially in relation to the price of energy. According to the latest ESRI report, inflation is beginning to outpace the growth of the economy with inflation at 7.1% and growth at 6.8%.

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Speaking in Brussels, Mr Martin said the Government is trying to "avoid" an era of stagflation but says lessons from the recessionary days of the 1970s show that chasing inflation leads to even higher price rises.

"I’ve been very clear, we cannot chase inflation from month to month. 

We know from the 1970s what happens if you try to chase inflation. You get second and third rounds of inflation which last for a much longer period.

He insisted Ireland is still on a path for economic growth, forecast until the end of the year. The Government plan, he says, is to "protect" and sustain the ability of the economy to continue to grow – through jobs and investment - while assisting people with the cost-of-living crisis.

Mr Martin said the Government is considering a set of "targeted, temporary" measures to alleviate pressures on people but within the normal, annual budgetary process.

"There has to be a combination of monetary policy, fiscal policy, through targeted and temporary measures to try to keep pressure off people," he said.

"The best opportunity to do that would be the budget, and that’s been our view and consistent position.” 

The Government has had a "very good budgetary discussion" about how to "deal with the cost of living but doing it in line with the ESRI reports," he said.

But Government policy remains to do so "in a comprehensive way that sustains growth throughout the winter because the winter will be difficult, particularly on the energy front,” he told reporters.

"We’ve got to think about this, to do a lot of work on this to make sure that the measures don’t add fuel to the fire but rather take pressure off those most in need but also takes space that we could dovetail those measures around long-standing policies around the climate, childcare so we can create a sustainable pathway."

"We don’t see anything before the budget," he confirmed.

Mr Martin was speaking on the margins of an historic EU summit where leaders will confirm candidate status on Ukraine which is intended to lead to the country becoming an EU member. Ireland has been at the forefront of supporting "rapid" accession talks for Ukraine.

"The EU is sending a message of solidarity to the people of Ukraine that you belong to the European family, you belong to the European Union. We in Ireland know what being in the European Union means," the Taoiseach said. 

"I cannot comprehend how we could ever refuse accession to other member states because membership can be transformative."