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Leah Farrell
inflation crisis

'Situation has deteriorated': Protecting businesses and jobs top priority, says McGrath

Tánaiste Leo Varadkar met 40 business representatives for a pre-budget meeting yesterday.

PUBLIC EXPENDITURE MINISTER Michael McGrath has said protecting businesses “is a top priority” for the Government.

Speaking at the Fianna Fáil think-in in Mullingar yesterday, McGrath said the budget package in two weeks time “will need to be substantial” as the “situation has deteriorated”.

Given the escalation in inflation and the rising cost-of-living, McGrath said what the Government will look to do on budget day will go far greater than they were even considering back in July.

Taoiseach Micheál Martin said yesterday the inflation crisis is putting employment at risk. McGrath reiterated that point stating that “protecting employment is a top priority”.

He said hundreds of thousands of jobs were lost last year due to Covid-19 but they were all largely regained, said the minister, pointing to the fact that 2.55 million people are now working.

McGrath said the Government can now not stand by and see viable businesses closing due to the mammoth energy bills they are facing.

“So we will be determined to protect the gains we’ve made on the economic side. And that will require some some bold decisions to support businesses,” he said.

Pre-budget meeting

His comments come after a pre-Budget meeting was held yesterday afternoon between Tánaiste and Minister for Business and Enterprise Leo Varadkar and 40 representatives from a wide range of organisations representing business, hospitality, tourism and industry.

A spokesperson for the Tánaiste said business representatives were told that the Government will help businesses to deal with the energy crisis and protect jobs.

He pointed out that this Government and the previous one helped to keep businesses going and protect jobs during the pandemic, adding that this assistance will continue.

While he said more details will be announced as part of Budget 2023 later this month, all indications are that Covid-style supports will be rolled out to help businesses that are struggling with rising energy costs.

However, while McGrath said the situation for businesses is very serious, the level of spending in Budget 2023 will not be in the realm of the spending rolled out in the pandemic. 

Speaking after the meeting, Varadkar said: “During the pandemic, the Government intervened to save countless jobs and businesses. For many businesses, the energy inflation crisis is comparable. It requires a response of sufficient scale, and that will happen.”

‘Big decisions to make’

The public expenditure minister said the Government has “some big decisions to make in the next couple of weeks”, adding that as the budget is two weeks earlier, it is under time constraint to make decisions quickly.

Bills for the Government are also rising, said the minister, stating that the cost of running schools, hospitals, local authorities, and the public transport fleet has all become suddenly much more expensive.

In terms of householders, McGrath said the electricity credit is “obviously a very live option”, because it has worked already and it is something the system could administer quickly.

Government sources have said the €200 electricity credit has to be substantially increased, with it widely expected that at least three discounts of €200 or more are on the way to customers between now and next spring.

“We’re looking at a whole range of other options,” he added, stating that he has asked all departments to offer proposals around cost-of-living measures in terms of charges and fees that people are facing.

When asked about the UK’s energy price cap and whether Ireland would follow suit, the minister said that nothing has been ruled out.

However, he said they did not have the specific details of how exactly the UK proposal might work, stating that it hasn’t been fully costed and would appear will require a “large amount of borrowing”.

“I think a lot will happen in the next two weeks,” said McGrath, adding that the Irish Government will examine the details of the UK’s plans, as well as the European Commission’s proposals which should also be more concrete in the coming days.

“But in the meantime, we are developing a suite of options around direct support for households and for businesses. I think that is the most likely scenario,” he added.

Budget 2023 expectations

The budget package will be significant, promised McGrath, but he was quick to dampen expectations that it will fully offset the costs the people are facing.

“It won’t, that won’t be possible. But for many, I think it will go a very long way… I think when we look at the needs of older people, if you’re living alone, running a household or families with children. The burden I think is heaviest with groups like that. So we will do the best we can to support them.

“But it would be disingenuous of me or of anyone to suggest that we can fully insulate the country from the extraordinary level of inflation that we’re seeing. That’s not going to be possible,” he said.

On the separate matter of McGrath taking on the role of finance minister when Martin rotates out of the Taoiseach’s role in December, he said that it would be a matter for the Taoiseach.

The Taoiseach answered by saying parity of esteem has been a foundation stone of this Government.

Over the next two days, the Fianna Fáil parliamentary party is gathering in Mullingar ahead of the Dáil’s return on Wednesday.

Speaking at the think-in, Fianna Fáil TD for Cavan-Monaghan, Niamh Smyth said, “My colleagues and I in Fianna Fáil are acutely aware of the effect the energy crisis is having on families and businesses. People are justifiably concerned about skyrocketing energy bills and I look forward to discussing the exceptional response required in Budget 2023 to address this crisis.”

Senator Catherine Ardagh commented, “Over the next two days, we will focus on the core values of the party- improving quality of life and access to key public services such as health, housing, education, childcare, disability services, older people, and a fair welfare and tax package.”

Fianna Fáil in Government will deliver an exceptional response in Budget 2023 to tackle the energy crisis said Fianna Fáil TD for Dublin North West, Paul McAuliffe.

“The Budget will deliver immediate measures to assist all households with energy bills and working families will see a tangible reduction in childcare and education costs. My colleagues and I will be fighting for a one-off cost of living package for the most vulnerable and the squeezed middle especially.

Deputy McAuliffe concluded by saying, “We have spent €2.5bn so far this year to help offset the rising cost of living. We will do more in the upcoming Budget, which, in addition to normal Budget measures for 2023, will include a substantial package of one-off measures for the months ahead.”

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