Michael McGrath calls on energy companies to pass on lower costs to consumers

The finance minister has said he will take on board calls by the European Central Bank to roll back cost-of-living supports, but that an extension of the measures is a national decision.

e also called on energy companies to pass on lower costs to consumers.

“Governments have to make decisions that are right for their own respective countries,” Michael McGrath told reporters on Friday morning when asked about the ECB’s call.

“We have to look at the overall picture then and see what we can afford and what is appropriate – and take on board what the ECB has said as well.

“We do have to consider the reality of the cost-of-living pressures that households are facing in their day-to-day lives and that, for me, is going to be the critical issue.”

He said his department was looking at the inflation rate, the cost of the measures and “different timeframes for the extension of different supports”.

He said the Government’s focus was on the supports that expire at the end of this month, which include lower fuel excise duties and Vat, the €200 energy credit for households and the €1.2bn energy support scheme for firms.

He said the Government would “be careful not do anything that adds to inflation or that stops or slows down the decline in inflation” and said he hopes consumers will soon feel the recent fall in wholesale oil and gas prices.

“It may take a while but at the earliest possible opportunity, we do want to see consumers get the benefit of the reduction in the wholesale gas prices,” he said.

“These are commercial decisions for the companies concerned but the sooner that we can ease the burden on consumers the better.”

He was speaking as the Department of Finance published its sixth annual debt sustainability report, which said public debt is still too high.

Public debt increased to €226bn at the end of 2022, up from €203bn just before the pandemic.

That amounts to 86pc of national income, or around €44,000 for every person in the country.

The department’s debt report found that a 1pc hike in interest rates by 2025 would not materially affect public debt in the short term, as it was borrowed at low rates over longer periods.

However, the report said that a worst case scenario that wipes out the corporate tax “windfall” – estimated at around €10bn last year – and cuts economic activity by 2pc could add 17 percentage points to the debt ratio within two years. That could rise to 25 points after a deeper cut to growth.

However, Mr McGrath was upbeat on prospects for the Irish economy this year, after fourth quarter gross domestic product came in above expectations and the International Monetary Fund recently upgraded its global growth forecasts.

“I think it’s fair to say that the mood has improved. It is certainly less pessimistic than it was a number of weeks ago,” he said.

“We do anticipate that the Irish economy will grow in every measure across this year and fundamentally that employment levels will remain high and unemployment will remain low and that is absolutely vital for the health of the economy and to give households the best prospects,” he said.