Editorials

The Irish Times view on the National Economic Dialogue: is it any more than a talking shop?

After a few years of emergency-style budgets in response to Covid-19 and the cost-of-living crisis, this autumn’s package needs to take a more strategic view

Budget ministers Paschal Donohoe and Michael McGrath: will face many demands for resources at the National Economic Dialogue taking place on Monday(. Photograph Nick Bradshaw for The Irish Times)
Budget ministers Paschal Donohoe and Michael McGrath: will face many demands for resources at the National Economic Dialogue taking place on Monday(. Photograph Nick Bradshaw for The Irish Times)
Sun May 26 2024 - 21:15

The annual National Economic Dialogue (NED) takes place today in Dublin Castle, where Government, employers, unions, social campaigners and others come together, ostensibly to discuss the economic state of the nation. In reality, with the exchequer finances in strong surplus and a general election in the offing, those present may see it as an opportunity to lobby for budget giveaways,

However, there are signs of change which those at the NED – taking place earlier than usual this year – would do well to pay heed to. The Department of Finance, which is responsible for economic forecasting, has pointed to trends which, as well as providing some opportunities, also threaten to disrupt inward investment and increase competition. One emerging risk is a subsidy war as the EU responds to the big incentives now on offer for investment in key sectors in the US. This would clearly favour the bigger states.

It is all part of the theme of the NED this year – a more “shock-prone world” and what this means for Ireland. The pandemic, followed by war in Europe and the Middle East has created a new dynamic in international political and economic affairs. And it is vital that Ireland takes account of this in national planning and in the management of its public finances.

After a few years of emergency-style budgets in response to Covid-19 and the cost-of-living crisis, this autumn’s package needs to take a more strategic view. This may be politically difficult with a general election in the offing, but it is what needs to happen.

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There are clear risks to the public finances, which make it wise to set aside cash for the future in two new funds, as the Government proposes. All sides, too, need to realise that the period of big growth in corporate tax may be over. Prioritising the use of public resources becomes vital – particularly in helping households in need and in building housing, schools, hospitals and other vital economic and social infrastructure. The days of big budget giveaways may soon be over. Budget 2025 needs to plan for the long term.