Taoiseach cautions prolonged Iran war will drive inflation and energy costs

Taoiseach highlights risks of prolonged conflict, warning of inflation, energy disruption and pressure on key sectors like aviation and food

Taoiseach Micheál Martin speaking to the media ahead of a Cabinet meeting at Government Buildings in Dublin. Picture: Brian Lawless/PA Wire

Taoiseach Micheál Martin has warned that if the conflict in the Middle East continues “for any length of time”, it will have a “very significant impact” on the world economy, livelihoods, and will subsequently have a range of secondary effects.

This comes as Donald Trump gave a televised statement on the war in Iran, stating his "core objectives" are "near completion", after pledging the US would leave the country in two to three weeks.

Mr Martin said the conflict will have a range of impacts, including increased inflation and higher costs for products derived from oil, such as fertiliser, plastics and helium used in semiconductors.

The aviation sector will also come under threat, he said.

“When you think that over the last five, six, seven, eight years, we've had one shock after the other, Brexit, Covid, the Russian invasion of Ukraine, different to this crisis, but nonetheless created an energy disruption of a significant kind. Then we had the tariffs coming from the US, and now we have this war, and it's been endless. Cumulatively, all of those will have impact,” Mr Martin told Newstalk Breakfast.

The Government has taken measures to ease the pressure, but he said no government can compensate for a crisis of this kind in terms of every sector or every person's livelihood.

“So we have to try and target it at those who need it the most and also try and ease the pressure of people generally at the fuel pump. But also then, we have to focus on protecting those that are key to the productive side of the economy.

“Hauliers are key to trade, hauliers are key to getting food on our shelves and so on like that. And so that's why we took specific measures to help hauliers. We'll have to look at the whole area of food production as well in terms of the fertiliser issue and costs there, just say we did in Covid, if you remember, and it wasn't spoken about as much, but we kept industry going during Covid,” he said.

Mr Martin added: “We took specific measures in terms of enabling pharmaceuticals, enabling all of that. If this continues at length, we have to maintain that sort of support for Hauliers. We'd have to look at food production more generally. But we hope this comes to an end sooner.”

The Taoiseach said the Government was not considering rationing fuel at this stage.

During his address, Mr Trump said the US has "all the cards" in the conflict and that it would hit Iran's "electric generating plants very hard" if a peace deal is not agreed.

Acknowledging the economic pain caused by the conflict, Mr Trump blamed a “short-term” rise in gas prices on Iran’s actions and insisted the US had become energy independent.