FINANCE Minister Paschal Donohoe has warned that it’s “correct” to rule out a bumper package of cost-of-living supports in this year’s Budget.
The Government is bracing amid fears an intense trade dispute between the US and the EU could spark higher prices and fewer new jobs here.
Minister Donohoe said measures which saw a record €2.6billion Social Protection package[/caption]
Public Expenditure Minister Jack Chambers has already warned that €250 energy credits will be cut, while Taoiseach Micheal Martin last month moved to dampen hopes of a cost-of-living package.
Minister Donohoe said measures which saw a record €2.6billion Social Protection package including 10 lump sum payments won’t be able to be repeated in Budget 2026.
He said: “Yes, the cost of living is still high. I know it’s a huge challenge for so many, but we don’t have the inflation levels – the five per cent and 10 per cent – that we had for so many years that necessitated spending billions of euro to help offset prices going up.
“And it is correct, therefore, to say at this point in time that we can’t repeat those kind of measures again and we will need to make sure that we have the enhanced strength in our economy and in our public finances to deal with the kind of risks that we’re outlining today.”
Donohoe said it “could well be the case” that certain Irish sectors will see job losses if a tit-for-tat transatlantic trade war hammers the economy for billions.
US TARIFFS
US President Donald Trump has promised to announce his package of tariffs on the EU on April 2.
Donohoe said: “If we do end up in a position of a real, intense trade dispute developing between different parts of the world, it does mean the risk of prices going up, of fewer new jobs being created, and our economies growing slower.
“Thankfully, we are approaching that with the foundations of our economy currently strong, with lots of people at work, where our public finance is in good condition, but the risks here could indeed have an effect on the performance of our economy.”
But he added that the strength in the economy overall would mean that other jobs would be available in other areas.
Donohoe said the Irish Government is engaging with the EU and the US to avoid the imposition of tariffs.
He said: “Unfortunately, because of the scale of trade dispute that could be created by the decision that has been made to apply tariffs in the first place – the goods that are coming out of Europe – it does mean that many different sectors in many different economies are going to be hurt, and we’re trying to mitigate that hurt and avoid it happening.”
And Donohoe said he hoped that the level of certainty on the global economic picture would be clearer ahead of budget preparations later in the year.
He said: “We have to be very clear that as we move through the rest of this year – and probably the years to come – that the keeping of jobs, the protecting of the competitiveness of our economy, will be our number one priority.”
BUDGET PROMISES
Last year’s Budget package included two double Child Benefit payments handed out before Christmas, €400 extra for carers, €300 for those on Fuel Allowance and an additional October cost of living double payment as well as the usual social welfare Christmas bonus.
Certain spending measures look likely to remain in place, but households will no longer be given energy credits to help with their electricity bills.
Officials from the Department of Public Expenditure recently warned Public Expenditure Minister Jack Chambers that electricity prices will rise over the next five years due to the need to invest €20billion in Ireland’s energy grid.
WHAT WAS BUDGET 2025’S COST OF ‘LIVING PACKAGE’?
THE last budget, which was announced in October, saw thousands of families across the country benefit from cost-of-living measures.
The package, which was worth €2.6 billion in total, was the largest social welfare package in the history of the State.
It was made up of a mixture of increased payments and once-off lump sums for social welfare recipients.
Other measures in Budget 2025 included an expenditure of €6.9billion and €1.4billion in tax changes.
Energy credits were also agreed as part of a €2.2 billion cost-of-living package included in Budget 2025 to help people through the winter.
The Department said our electricity grid needs serious investment to cope with the growing number of homes, power hungry data centres and to receive energy from new wind farms.
They warned that this €20billion bill will likely see electricity prices for households grow over the coming five years but urged the Minister not to use energy credits to combat this due to the cost to the State.
A €100 energy credit for every household costs the State €210million.
ENERGY CREDIT CUT
Minister Chambers told the Irish Sun that the Government is planning to move away from energy credits but will help households cope with rising electricity prices through social welfare boosts and tax cuts.
He said: “We have said we’re going to move away from one off temporary measures.
“I think when we’re making decisions we have to consider them in the context of the overall fiscal parameters that we’ve set out.
“And in that context, there are lots of ways we can support families in the context of fuel poverty or higher energy bills and that will be considered in the round in addition to the overall capital investment in our energy system some of which will be central to the National Development Plan process that will help mitigate some of the otherwise increasing costs as part of any increase in energy bills.”
But Government officials earlier this month warned that new targeted supports are needed to help people pay energy bills with one in four households in arrears on gas bills and one in ten behind on electricity bills.
HIGH PRICES
The Department of Environment sent a stark warning to the new Energy Minister Darragh O’Brien about the number of households in need of help as electricity and gas prices remain too high.
A briefing document sent to the Minister claims that the average annual electricity bill for a household in Ireland stands at €1,779 with the average annual gas bill at €1,503.
The briefing said that Irish electricity prices are 61 per cent higher now than they were in December 2020 while gas prices are an incredible 90 per cent higher.
Officials warned that 230,000 electricity customers in Ireland are in arrears on their bills – representing around 10 per cent of the market.
Some 162,000 households are in arrears on their gas bills – representing 24 per cent of the market.
The Government introduced a series of energy credits to support households with electricity bills since 2022 that have been worth €1,450 in total per household, at a cost of €3.3billion.
TARGETED SUPPORTS
And despite Minister Chambers confirming that the Government will be moving away from across the board energy credits for all households, the Department of Environment has advised Minister Darragh O’Brien that targeted supports will be needed to help the hundreds of thousands of households that are in arrears on their energy bills.
They said: “Targeted supports will be required to provide for those least able to pay, to reduce the number of customers in arrears and ensure that the figure does not grow further which would cause the financing of the Green Transition to be spread across a narrower group.”
The briefing document advises that wholesale energy prices are likely to fall over the coming years; however, these savings will not be passed on to households due to the level of investment needed to improve our energy grid.
They said: “While wholesale costs are expected to further decrease in coming years, this will be negated by increases to charges associated with security of supply, renewable energy subsidies, grid maintenance and expansion and market imperfections.”
