Government renews commitment to Budget cost of living measures ahead of interest rate rise

There has been a renewed commitment to significant cost of living measures in the Budget from the Minister for Finance as he acknowledged that the interest rate rise, confirmed on Thursday by the European Central Bank, will come as another blow to many Irish households.

“I understand that for many, many families and for many businesses, for many mortgage holders, this is yet another cost and another challenge on top of the change in the price of energy that we’re also acutely aware of at the moment,” said Paschal Donohue.

He said that the Government has been making the case for this being a cost of living Budget. “It is why we want to have measures that, through taxation, will be of help for people dealing with the higher cost of living in 2023.”

The Minister said that there needs to be measures to help with the higher bills that many households are facing, accepting that the expected interest rate rise will be “another cost for many on top of bills that have already gone up”.

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Earlier, economist John Fitzgerald described calls for a cap on energy prices as “bonkers”. He suggested that the UK economy was “heading for the rocks” because of plans for a cap there.

[ ECB raises interest rate by three quarters of a percentage point ]

[ ECB makes amends for forecasting errors with jumbo rate hike ]

[ Irish banks review non-tracker rates after ECB’s latest hike ]

Speaking on Newstalk Breakfast, Professor Fitzgerald dismissed as “not a good idea” a proposal by Sinn Féin to reduce electricity prices by returning them back to “pre-crisis levels” at an estimated cost of €1.7 billion.

The key issue, he said, was identifying who was being hit the worst so any subsidies or measures could be effectively targeted.

Prof Fitzgerald said the Government needed to concentrate on assisting those who are going to go cold this winter. People on a fixed income in rural Ireland using oil for heating would not be as badly impacted as a pensioner in Dublin who relied on gas, according to the economist, as the price of oil is possibly on the way down while the price of gas looks set to increase. The bulk of the population does not need to be protected, he argued.

However, the Money Advice & Budgeting Service (Mabs) says it has seen a huge in working families and individuals seeking help. Speaking on RTÉ radio’s Morning Ireland, the organisation’s spokesperson Michelle O’Hara said that while it traditionally would have dealt with people who were social welfare dependent, that is changing now.

“We’re seeing working families, working individuals,” she said. “Many come for self help. Effectively what they’re looking for is pointers, advice and information.

Mabs is advising people in financial difficulty to avail of its assistance and not to ignore mounting bills. People at immediate risk of being disconnected are dealt with as an emergency and will be seen, and helped immediately, she said.

It is natural for people to worry, said Ms O’Hara. It is “hugely overwhelming” to receive a bill for which a person did not have the resources to pay either in full or partially. She advised those affected to contact the advisory service.

Engagement is key, she said. “Bills don’t go away.”