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Ministers met last night to discuss the impacts the sanctions on Russia could have domestically. RollingNews.ie
energy costs

Govt to take further action on rising cost of living before October's Budget, says Varadkar

Varadkar said the cost of living was rising even before the war in Ukraine, and now it has only gotten worse.

THE GOVERNMENT WILL not wait until October’s Budget to take action against the rising cost of living, Tánaiste Leo Varadkar has confirmed. 

His comments come a day after he said the Government will have to look at excise duty on petrol and diesel. 

Speaking in Mayo this morning, Varadkar said the cost of living was rising even before the war in Ukraine, and now it has only gotten worse.

Senior ministers met yesterday to discuss the situation in Ukraine, Ireland’s humanitarian response and also the impacts sanctions could have domestically. 

Ministers agreed that “innovative responses” would be needed to deal with issues like the rising costs of fuel and energy, as well as possible issues with supply chains. 

When asked when the Government would introduce measures to cushion the blow for households and business, Varadkar said it would be before October’s Budget. 

“I think I’ve indicated that people won’t have to wait until the budget. But people will have to wait until we have the European Commission paper done on this. Because whatever we do to help people and help businesses with the cost of fuel, and we know we need to do that, we need to do it in concert with other European governments. So that’s going to take a couple of weeks,” he said.  

The EU is currently working on a white paper on measures that member states can take to help ease the rising costs in energy. 

Varadkar said the conflict will cause energy prices to go higher, and stay higher for longer.

“We had a good discussion about that among ministers yesterday. And we’re going to examine ways in which we can respond. We’re not going to do anything immediately. We want to wait for the European Commission paper on this before we make a decision,” he said.

He  added that there can be no doubt that rising costs “is affecting everyone”.

“Obviously, for motorists they are seeing the increase in petrol and diesel. Over the last couple of months for householders, they are seeing the increase in home heating oil and gas electricity bills, and also for business as well. Business have the advantage of being able to reclaim VAT, but obviously that’s not the case when it comes to excise for example. So we’ll have to think about that in the next couple of weeks,” said Varadkar. 

“In terms of the economic effects of the war in Ukraine, it’s just very difficult to predict because nobody knows how long it’s going to go on for, for example, and nobody knows for sure how it’s going to end and what the extent of the effects on supply chains, on energy, on refugees, are going to be,” he said.

While he said the Irish economy bounced back as the pandemic restrictions were eased, “this is going to be different”, he said.

“And it’s just not possible at the moment to predict what the impact will be on our economy. We’ll manage it as best we can, as we always have in the past. Thankfully, public finances are in a reasonably good state and we’ve nearly 2.5 million people at work in Ireland. So we have some capacity to intervene, but it’s not an unlimited capacity,” he added. 

Speaking to reporters this afternoon, the Taoiseach said ministers went through a “whole range of areas that will be impacted as a result of this war” such as energy prices, the economic situation, trade, cybersecurity, and the humanitarian aspects.

The Government is very aware that the energy issue is “very pressing”.

“Key ministers in that area will work in terms of devising a sustainable model and approach to dealing with that issue, because it’s not just this week, it’s something we’ve got to work through for the medium term as to how we deal with this exponential growth in the price of fuel and the price of gas, which has really just risen to extraordinary heights as we emerge from Covid,” he said.

Fuel, energy security and the food issue in terms of the wider issue across Europe, will be impacted by the war, he said. 

“Given the amount of grain exported by Ukraine and Russia is enormous,” he added, stating “these are very real impacts that would happen”.

“Every single government department is now working on scenario planning, potential impacts, how can we respond to those,” said the Taoiseach.

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