Tanaiste increasingly ‘concerned’ about economic impact of Iran war

The Tanaiste has said he is becoming “more concerned” about the impact of the Iran war on inflation.

Simon Harris was in Co Cork for the second UK-Ireland Summit on Friday and said: “Two weeks in, with no signs of de-escalation, I am becoming more concerned around the inflationary impact of this war on the global economy, on the eurozone economy and on the Irish economy.”

The Minister for Finance said his department is currently preparing its spring forecast and said he has asked that, as part of it, a “macroeconomic analysis of the impact of the conflict” be undertaken.

Mr Harris said it would be ready “towards the very end of this month or the very start of April”.

Asked if he was modelling potential interventions the Government could take, the Tanaiste said that what is needed first is “to try and have the best understanding and the best data of the various scenarios that could present themselves to the Irish and European economy in the time ahead”.

“When you see that, see what the potential impact, for example, on growth rates might be, see what potential impacts on inflation rates might be, that then allows the Government, and indeed the Oireachtas, to decide what the best policy response might be, and that’s the piece of work that we’re doing now.”

Mr Harris said that work would not “go on for an elongated period of time”.

He said he is “really conscious” households and businesses are “seeing the impact” of the war.

While Mr Harris said the Government does not “rule things out in relation to this”, he said “any economic medicine that the economy may require is the correct prescription”.

The Tanaiste was also quizzed about criticism of the Government by the fuel industry and said: “There are serious peculiarities, I think, as a diplomatic term, in relation to pricing structures that we’re seeing on the forecourts.

“There’s a legitimate debate to be had about the Government response, but let’s not just take the word of the industry.”

Discussing the investigation being undertaken by the Competition and Consumer Protection Commission (CCPC) about potential price gouging following the outbreak of the conflict, Mr Harris said while he is still waiting on the results “the Government rules nothing out in terms of further legislative action that may well be required to beef up and give further powers to the CCPC, and Minister Burke is working on that”.

He said he would be in London from Saturday meeting with members of the British Government, adding: “We will, of course, share insights in terms of what we’re seeing in relation to energy prices.”