If new Minister for Finance Jack Chamber’s first budget is a big giveaway that boosts household incomes, it would leave less room for boosting investment. Photograph: Leon Farrell / Photocall Ireland which predicts a 2 per cent rise in living standards this year and a 3 per cent increase next year. This means that average earnings are now rising ahead of the rate of inflation, after a period when soaring inflation outpaced wage growth, leading to a big national hit to living standards.
It is a tricky balance. But along with the Central Bank and the Fiscal Council, the ESRI is also making a more subtle point: if new Minister for Finance’s first budget is a big giveaway that boosts household incomes, it would leave less room for boosting investment. Not only would it divert cash, but it would risk another inflationary push, in addition to the one coming from higher State investment.
With living standards now on the rise, there is no case for another round of general household supports in the budget. Instead, the focus needs to be on investment, ashas also said in its pre-budget document. But for politicians, the ability to put money in people’s pockets may still prove irresistible.
Source: News Formal (newsformal.com)
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