Chambers Ireland warns a flexible Budget 2023 is needed in response to inflation crisis
Chambers Ireland warns a flexible Budget 2023 is needed in response to inflation crisis.
Chambers Ireland, the voice of business throughout Ireland, today (27th August 2022) warns that Budget 2023 must be flexible if Government is to respond quickly, and where needed, to the impact of the escalating energy and inflation crisis. All parties should ensure that neither the Budget nor the ongoing pay talks accelerate the externally induced inflation shock through fuelling domestic inflationary pressures.
Speaking in advance of renewed public sector pay negotiations, and in the wake of further domestic and commercial energy price increases, Chambers Ireland Chief Executive Ian Talbot said:
“We have a difficult winter ahead of us, and the energy crisis that is driving inflation will be with us until Europe becomes independent of Russian fossil fuels.
“Government has a difficult challenge. The forces driving the pain which Irish businesses and households are experiencing are marshalled by the Kremlin. The pressure we all feel is a strategy to weaken our morale, our economy, and our society. Our Government cannot affect the causes of this crisis, and can only attempt to minimise its impact.
“Our capacity to respond to this crisis will be limited because of the impact of Covid and Brexit on our economy, so government must ensure Budget 2023 has the budgetary headroom needed to deliver support to those that are most affected.
“With the cost of living increasing, everyone will be impacted, but the impact will not be equally felt by everyone. People who are on lower incomes will have the greatest struggle, and this will have a disproportionate effect on the domestic economy. Businesses on narrow margins are likely to become unsustainable.
“Ensuring that we can continue through our third economic shock in three years will require continued solidarity across all sectors and all demographics with the costs being borne by those capable of bearing them.
“Energy cost increases will be felt most by carers, lone-parents, and those in fuel-poverty; not public sector workers and the higher paid. Government efforts must focus on those that will really struggle rather than those of us that will feel discomfort.”
Chambers Ireland Head of Policy, Shane Conneely, continued
“Government policy for the year ahead must be finely balanced if it is to ensure the delivery of housing targets and the national development plan, without pushing inflation even higher.
“Maintaining tax rates and bands will not only be disinflationary they will ensure that government has the resources to deliver NDP projects despite their higher costs. Locking above profile Corporation Tax receipts into a green transition fund will facilitate the delivery of infrastructure across the decade.
“Pro-cyclical policies like tax/duty reduction, increasing current expenditure, and poorly-targeted transfer payments will reduce the degrees of freedom for government action and will also lock us into a policy pathway that is difficult to retreat from.”
-ENDS-
For further information:
Shane Conneely, Director of Policy and Communications, 086 3244 940 or email shane.conneely@chambers.ie
About Chambers Ireland:
Chambers Ireland is the voice of business throughout Ireland, with 40 member chambers across every major city, town and region of the island. Aligning our strategic priorities with the UN’s Sustainable Development Goals, our aim is to make places better to live, work and do business.