Brighter days ahead as pressure eases

Editorial

As Spring continues to blossom, there are green shoots of a different variety emerging.

Inflation is expected to fall below four per cent this year, signalling some relief, at last, for embattled householders and businesses.

The tide, it appears, is starting to turn. Pinergy, last week, announced a cut to its energy prices, putting pressure on other energy providers to do the same. While Electric Ireland has said this week that there will be cuts to the rates for SMEs, it is a little slower as far as the private/residential market is concerned. They say they are closely “reviewing” the situation. It’s difficult to understand – surely the rate is the rate and the grid is the grid and it shouldn’t matter whether the end customer is a business or a household. It seems like a cop out.

Tax receipts for the first month of 2023 were very positive, finishing 12% ahead of January 2022. The figures include income tax receipts, which despite job losses in the tech sector, were nine per cent ahead of January 2022.

Consumer sentiment appears strong too. VAT receipts held up over the Christmas period, again 12 per cent ahead of January 2022.

This was somewhat unexpected against a backdrop of mortgage interest rate hikes, higher energy bills and other cost of living pressures.

The buoyant spending, economists say, is likely due to a combination of strong savings and an increase in disposable income due to wage inflation in some sectors.

The Government’s Spring Cost of Living Package last week will help to ease pressure on families but also serves to buoy up consumer confidence.

It means households need not fear a brutal and sudden turning the tap off on supports.

Among the highlights are the next energy credit in March, a further bonus payment for Social Welfare recipients of €200 in April; and additional €100 payment per child on Child Benefit also in April and increased Back to School Allowance in July. Lower VAT and excise rates will also continue to apply on gas, electricity, petrol, diesel and marked gas oil until October.

The Hot School Meals programme will be extended to all DEIS primary schools from September, benefiting 64,500 children, meaning children in these schools will have access to at least one hot meal a day targeting child poverty at source.

Of course, there are still many people and families struggling. If you are tearing your hair out trying to make ends meet and put food on the table, please engage with Citizens Information or MABS to ensure you are accessing all available supports or to come up with a plan to get back on track. People are there to support you, not to judge.

Overall, the Irish economy is expected to perform better than previously expected this year as inflationary pressures across global markets ease.

The Irish Businesses and Employers Confederation (IBEC) published its economic outlook for the first quarter of the year. The group expects the Irish economy to grow by 3.6 per cent in 2023. Consumer spending is also predicted to grow this year, albeit at a slower rate than 2022.

There are still some choppy waters to be navigated – such as how the global economy manages the delicate balance between inflation, growth and interest rates. However the improved outlook in Europe and the US suggests a more resilient global economy.

IBEC, for one, say a “prolonged recession in Europe is unlikely”, thanks to reduced exposure to fluctuating energy prices.

The group’s chief economist, Gerard Brady, predicts the Irish labour market will remain tight this year with employment growing.

“High employment, rising wages and more active recruitment among employers are leading to sharp decreases in people remaining on unemployment supports along with rapid growth in the overall labour force,” he said.

Despite all the positive indicators, there remains a challenge to improve infrastructure and supports, in particular housing and health, and the Government has its work cut out in that regard.

As we head towards March, and the clocks are set to go forward, it certainly seems there are brighter days ahead.