Taoiseach Leo Varadkar has warned people not to expect the same level of one-off measures aimed at offsetting higher prices in the upcoming budget as were announced last year despite the ongoing cost of living crisis.
He accepted that many households remain under significant financial pressure this year but said inflation had moderated over the last 12 months while wage increases “across the economy” had offset at least some of the impact of rising prices.
In response to a question from The Irish Times at a Fine Gael enterprise conference at South East Technological University in Waterford, Mr Varadkar acknowledged climbing prices in key areas including groceries, fuel prices, home loans and health insurance, while energy prices remain dramatically higher than two years ago.
However, he stressed that inflation was at “roughly half the rate” of last year and he noted that “since the last budget, there’s been a 7.8 per cent increase in the minimum wage” although he accepted that wage increases of that scale were “not true for everyone”.
Budget 2025 main points: Energy credits, bonus welfare payments, higher minimum wage and tax changes
Budget 2025 calculator: How this year’s budget will affect your income
VAT cuts for restaurants were a bad idea last month. Why are they a good idea now?
Got a mortgage? There is up to €2,500 in tax relief waiting for you
He said there would “still need to be one-off measures, but it isn’t going to be possible to have them at the scale that we had them last year”.
Mr Varadkar also said that in addition to the one-off measures in the budget “which will be in people’s pockets before Christmas” there would be “a whole set of measures announced in the budget that will kick in in January”.
He pointed to “pension increases, welfare increases, a further increase to the minimum wage and income tax reductions which will help working people in particular to pay the bills essentially in January, February”.
The Minister for Public Expenditure Paschal Donohoe said the one-off measures “will still be meaningful” and stressed that helping people to manage the cost of living crisis will be a “really important feature of the budget”.
Asked about mortgage relief and support for landlords, Mr Donohoe said the Government recognised “a need to do more” for the rental sector.
“Any such help does need to be targeted because while we are aware of the challenges that many are facing at the moment, the Government’s also seeking to respond back across a whole variety of different issues,” he said.
Mr Varadkar sounded a notion of caution over corporate tax receipts and said that Ireland was “a small open economy and if things change in the world economy they change very quickly [in] Ireland”.
He said there would be a surplus of about €10 billion this year “and we can reliably anticipate a surplus of around €10 billion next year”.
He said there was a plan to set up two funds for the future – one to help cost higher pension costs for an ageing population and a second fund to cover the cost of future infrastructure.
“One of the big mistakes we’ve made as a country if you look back over the past couple of decades is anytime the economy goes down the first things that get cut is capital budgets. It’s much easier to delay the new road or delay the new housing projects or delay the new school than it is to cut back people’s pay or social welfare. We want to make sure that whenever the next downturn happens we have an infrastructure fund built up.”
Speaking at the same event, the Minister for the Environment Simon Coveney said the budget would also contain elements to support businesses.
“We want to, as a Government, use both one-off measures between now and the end of the year, and also in next year’s Budget, to be able to target and support businesses where we can to make sure that we can help with their cash flow, and obviously help with the cost of doing business, which has increased in Ireland in recent years, despite the economic growth that we’ve had.”
Spinal surgery controversy
Separately, Mr Varadkar said the expert review into the Temple Street children’s hospital spinal surgery controversy would be independent and comprehensive.
The Taoiseach said parents have made a number of requests which the Government is looking into, including the option of having second opinions for the children involved, which he said was understandable given the circumstances of what has arisen.
He said the Government had asked the parents of the children involved to “meet with the independent reviewer and to talk to him about the terms of reference. We do want to make sure that it’s comprehensive.”
He also stressed that it would be “really important is to stabilise the service because while all these reviews and investigations are ongoing there are children whose condition is deteriorating and we need to make sure that the service is stabilised and working well over the next couple of months”.
