Iran war price shock 'larger' than forecast - ESRI
The price shock caused by the conflict in Iran will be "larger and longer-lasting" than originally forecast, the ESRI has warned.
Dr Claire Keane told an Oireachtas Committee on Budgetary Oversight that the ESRI's previous forecast used the assumption that "oil and gas price pressures would moderate towards the end of 2026".
She said this led the ESRI to increase its inflation forecast to over 3% for the present year in its forecast.
However, she said the "crisis now appears likely to be more prolonged in nature and therefore the price shock will be larger and longer-lasting than built into that early forecast".
The expert said any further budgetary shock is likely to "put pressure on our ability to deliver on the longer-term infrastructure deficits such as housing, healthcare and transportation".
Dr Keane warned that "hard choices will have to be made" and that supports "should be financed from within the current spending limits rather than from additional expenditure".
She said any future emergency measures taken should be "targeted and explicitly temporary, with a clear distinction from longer-term structural reforms".
The ESRI’s research also showed that the targeting of the fuel allowance can be "improved to better support vulnerable households".
Dr Keane said the updated forecasts in the Summer 2026 Quarterly Economic Commentary will be published at the end of June.
Previous research showed that every 30% increase in oil and gas prices led to a 1% increase in consumer prices in Ireland, she said.
The ESRI also warned the committee that an "ongoing reliance on fossil fuels" leaves Irish households and businesses "exposed in the long-run" and reduces economic growth.
Dr Keane also said if the Government’s "recently introduced measures are not unwound in a timely manner, they will hinder our ability to reduce energy demand and incentivise the uptake of sustainable energy technology".
Academics from the UCD School of Economics and Energy Institute also told the committee that energy prices are "likely to remain high until at least the end of the year".
They said this means action must be taken in advance of winter when "heating will be needed".
Professor of Energy Economics Lisa Ryan also called on the Government to treat the "transition to clean energy as a national emergency".
She warned that Ireland faces an "acute exposure" to the global energy crisis due to an "over reliance on fossil fuels".
Adjunct Professor at Trinity College, John Fitzgerald, said the Government needs to "hoard resources to be able to provide proper protection for those on low incomes and the unemployed, who would otherwise freeze next winter".
"In the most serious case, where Ireland is worse off by 2.5% (or even 5%), there is no way that the Government could protect the bulk of the population from the consequences," he said.
He added, "we face a serious crisis" and that the Government "should keep its powder dry".
Not a single cent paid to farmers and contractors - Lawless
Meanwhile, Aontú TD Paul Lawless said not a single cent has yet been paid to farmers and contractors under the fuel support scheme.
He said the scheme is capped and the closing date is 27 May, one of the busiest times of the year on farms.
He said it is unfair that applicants must produce receipts for the entire previous year.
He said the carbon tax figures tell a story different to the Government's narrative.
He said the Government will collect €200 million more this year than last year, and that half a billion was collected from 2020 to 2023 that was never spent on climate measures.
On the NORA tax, he said the account is in surplus to the tune of €278m when farmers are desperately calling out for help.
The Taoiseach said he did not agree that the fuel scheme was inadequate and that the farmers' package is comprehensive.
He said every effort will be made to support farmers and contractors, and it is reasonable to base it on previous usage.
On the carbon tax, he said the revenue is used to support lower income households, farmers and retrofitting, and since 2020, €4.2bn has been allocated from carbon tax revenues for those purposes.
He said in 2025 it was €558m for solar PV, €350m for welfare measures, and the fuel allowance.
