The Cabinet was yesterday given a stark warning about potentially damaging economic fallout for Ireland from the unsettled global situation and the arrival of Donald Trump in the White House in the new year.
In its first meeting since the start of the general election campaign, which has seen all parties make expansive spending promises for the next five years, senior officials have drawn up the starkest warning yet about the dangers to Ireland’s prosperity from factors outside our control.
Ministers were told that the world is in an “especially challenging time for global peace and security” and that it was likely that Ireland would feel economic consequences from this.
A series of consultations, led by secretary general of the Department of the Taoiseach John Callinan with other senior officials across Government, is understood to be under way with a view to drawing up preparations for the country’s response to any unfolding challenges.
Election 2024 live updates: Economic storm clouds ahead on a chilly day on the election trail
Temperatures plummet on election campaign trail amid blizzard of political promises
Promises, promises: What do the Election 2024 parties stand for? Use this tool to compare their manifestos
‘I wouldn’t like to be a young person. You get a job but you have nowhere to live’: Mixed odds on Government at Mullingar dog track
While Ireland is in a good position economically, with significant buffers built up in cash balances, ongoing budget surpluses and the government’s savings funds, it will have to work intensively with EU partners and at national level to mitigate potential downsides, ministers were told.
Ministers were also informed that the work being planned will require a “whole-of-government approach, in which we deploy all political, economic and diplomatic tools available to advance and defend our national interests”.
Asked if this was a re-run of the response to Brexit, one senior source said, “Not quite. But close.” A second senior source concurred, saying, “It seems to have a Brexit-type energy to it.”
On economic matters and the likely direction of trade policy in the United States, there was strong support for the view that it is important to wait and see how the commitments will translate into policy initiatives, a senior Government source said.
Government figures said the new group will assess the risk of tariffs and protectionism on the Irish economy, with one eye also on the threat of rising protectionism within the European Union.
Coalition sources are concerned that European moves to create “national champions” among the corporate sectors of large EU countries could undermine State Aid norms and present risks for small open economies like Ireland, which would struggle to compete.
On the US side, one senior source pointed out that any type of tariff or protectionist stance in Washington would inevitably have an impact on Ireland due to the high proportion of Irish exports that are sold across the Atlantic.
It comes after a week dominated by expansive spending pledges made on the campaign trail, with Fine Gael and Sinn Féin trading increasingly strident criticisms of each other’s economic record on Wednesday.
Fine Gael attacked Sinn Féin’s manifesto promises on tax and spending in a new ad, saying the party “can’t be trusted” and “would raid our public finances”. Sinn Féin’s finance spokesman Pearse Doherty said that Fine Gael was “resorting to barefaced lies” in the ad, which he branded as “pathetic”.
Irish companies are already preparing for impact of Trump’s tariffs
“The contents of this advertisement are complete and deliberate lies from a party that can’t stand over its own record of a massive waste of taxpayers’ money,” he said.
[ Irish house prices continue to rise at annual rate of 10%Opens in new window ]
The party also doubled down in its attacks on the Government’s housing record as new figures showed house prices rising nationally by 10 per cent, with its housing spokesman saying Fianna Fáil and Fine Gael were “pouring fuel on the flames” of the housing crisis.
Minister for Public Expenditure Paschal Donohoe countered that Sinn Féin’s proposals for affordable housing were unworkable, again casting doubt over whether banks would write mortgages for homes purchased under the scheme.
- Sign up for push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Listen to our Inside Politics podcast for the best political chat and analysis
- Sign up to our Inside Politics newsletter to get the behind-the-scenes take direct to your inbox
