Lauren Boland reports from the European Council in Brussels
RECESSION IS A risk but not a given for countries around the world, the Taoiseach has said at the EU Council.
Rising inflation has put leaders on alert to the possibility of recession as eurozone countries meet today to discuss the current economic situation in the union.
Taoiseach Micheál Martin is joined in Brussels today by Minister for Finance Paschal Donohoe, who currently holds the presidency of the Eurogroup.
Speaking to reporters ahead of a Euro Summit, the Taoiseach said that there is “a risk of recession globally and across Europe but you can’t take that as a given”.
“That’s why this particular period has to be navigated very carefully.”
He said that Ireland’s indigenous and foreign direct investment is strong but any weakening of global markets could affect our exports in 2023, though there is “no immediate sign of that yet”.
“If you watch the last number of weeks, companies are continuing to invest in Ireland. The census figures reveal that people are coming to work in ever greater numbers over the number of years even through the pandemic, which all reflects a growing economy,” the Taoiseach said.
“But we have to try and get the balance right. We don’t want to end up in a stagflation situation. That’s something we want to try to avoid.”
Minister Donohoe said that eurozone countries must avoid the massive inflation seen in recent months becoming a normalised feature of their economies.
As president of the Eurogroup, the minister will be making a presentation to leaders from across the EU about developments in the European economy.
He will tell the EU Council members that while there are “new and growing” risks in economic performance, the expectation is still that the economy will grow.
However, Donohoe stressed that “we do need to acknowledge the risk that we could face if inflation does become embedded into our economies”.
“It is in all of our interests that [with] the inflationary pressures that we’re now facing, measures are put in place to do two things.
“Firstly, to avoid the risk that these pressures become part of our medium-term outlook and become embedded in our economies, but secondly, as actions are being taken to prevent that development, that governments also put in place appropriate measures to support those who were hit the most by the rising cost of living.”
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He said that “for many at the moment, the cost of living and how quickly it has increased is now leading to a very rapid fall in living standards” and that the eurozone must avoid budgetary measures that put further pressure on costs.
Consumer prices in Ireland werelast month than the same time last year, according to Eurostat – slightly higher than the EU average of 8.1%.
Afrom the Economic and Social Research Institute has forecast that the Irish economy should grow significantly despite external pressures, with an average inflation of 7.1% expected for 2022.