Paschal Donohoe focuses on risks as he opens dialogue on 2023 budget

Finance Minister Paschal Donohoe has hinted at risks to economic growth as the government grapples with next year’s budget.

Many of the risks that we identified as potential a few months ago are now the ones that are happening and that we are going to have to deal with,” Mr Donohoe said at the National Economic Dialogue in Dublin Castle on Monday.

In April, the government predicted that the national economy would grow by 4.2% this year (and 3.9% in 2023), while gross domestic product – including multinationals – would grow by 6.4% this year. year and 4.4% in 2023.

In May, the European Commission forecast Irish GDP to grow by 5.4% in 2022 and 4.4% in 2023, while the OECD forecast GDP growth of 4.8% this year while cutting its forecast to 2.7% for next year.

The International Monetary Fund still forecasts Irish GDP growth of between 5% and 6% over the next two years.

While Mr Donohoe said the government “would not sit idly by as these kinds of risks develop”, he insisted spending would have to be contained to keep the country solvent as borrowing costs start to increase.

“We can help, but we can’t confront and isolate ourselves from all the change, the change that’s going on, and we have constraints and we have limits in the decisions we have to make.

“The era of Covid, where you could borrow so much for so little, is now over.

“It must ensure that our reputation as a country able to borrow at an affordable rate will be so important in the times to come.”

The Taoiseach also toned down expectations of a free budget, insisting the government will not chase inflation “on a monthly basis”.

Micheál Martin insisted that the next budget will be a “cost of living budget” and that energy security will be a top priority for the government as Russia threatens gas supplies to Europe.

“We have to accept that the winter period could be the most difficult period of this crisis so far,” he said of Russia’s moves to use energy as “leverage” to “do pressure” on the EU.

“Our resources, however, are not unlimited, nor is our capacity as a small country,” he told the National Economic Dialogue, a key step in the budget-making process.

“We must prioritize and carefully manage our resources while ensuring that the most vulnerable people are protected.

“While we can, must and will continue to help, we cannot ease the entire burden of inflation.

“Our priority will be to strike a balance between tackling the rising cost of living and the risk of exacerbating those same inflationary pressures.”

He brushed off questions about placing corporate tax receipts in a rainy day fund, saying “the immediate priority of this year’s budget will be the cost of living”.

The National Economic Dialogue continues throughout the day.