The real crunch in this inflationary crisis was always expected to come after Christmas, when heating bills, higher mortgage payments and costlier weekly shops take their toll on household budgets. And that still may be the case. Several countries are forecast to experience significant downturns. In the case of the UK, the worst in more than 100 years.
However, the several big data points we’ve had in relation to the Irish economy since the start of the year have been remarkably positive.
First, we had exchequer returns from the Department of Finance, indicating the Government generated a record tax haul of €83.1 billion last year, €14.7 billion more than in 2021, on the back of big upticks in income tax, VAT and corporate tax, three tax categories that point to a strong outlook.
When most governments are feeling the pinch after the massive outlay on Covid supports, bumper taxes handed the Government here a budget surplus of €5 billion.
We are, to some extent at least, a victim of our own success
Then, on Tuesday, we had Enterprise Ireland’s end-of-year report, which indicated that the agency’s client firms created an additional 20,000 jobs last year. When jobs lost are taken into account, the net increase in employment by was 10,841, or 5 per cent. Firms backed by Enterprise Ireland employed 218,178 people in 2022.
To cap it off, the Central Statistics Office told us yesterday that the Republic’s headline rate of unemployment fell to 4.3 per cent in December, another two-decade low. A rate of 4 per cent is tantamount to full employment here.
Speaking at the Enterprise Ireland launch, Minister for Enterprise, Trade and Employment Simon Coveney said that whatever 2023 brings we’re starting from a strong base. In employment terms, no one could argue that. Housing and health are different matters altogether. Enterprise Ireland boss Leo Clancy said businesses here were increasingly concerned about the negative impact of housing.
Mr Coveney said the Government’s housing targets for 2022 and 2023 would be met, even exceeded, “but it’s not enough, not close, I’m afraid”. Some of the pressures around housing, he said, were the result of a fast-growing economy. In other words, we are, to some extent at least, a victim of our own success. That, of course, will be cold comfort for those desperately scrambling to get on the property ladder.
