Department of Finance conducting ‘macroeconomic analysis’ after Gulf escalation

The Department of Finance is conducting a “macroeconomic analysis” in the wake of the escalating bombing in the Middle East.

Tanaiste Simon Harris warned of “headwinds” towards the economy as a result of the conflict.

Speaking on Tuesday, he said: “In the coming days, I’ll be meeting with my European counterparts and with the European Central Bank to monitor the economic impact of this conflict.

“But in the here and now, the things to look at are things around commodity pricing, things around any potential shock to the financial markets, and also the fact that this further increases uncertainty.

“We’ve already had the uncertainty of tariffs. We now have uncertainty heaped on top of that in relation to this conflict.

“None of that is good, and all of that increases the headwinds towards the economy.”

The Finance Minister had previously said that he intended to reintroduce a “normal rhythm of a tax and a spending package” in the next Budget if there were no shocks to the economy.

Asked on Tuesday if the escalating conflict meant his stated ambition to cut taxes for workers were off the table, he said: “No.”

Mr Harris said he has asked his Department of Finance to carry out a macroeconomic analysis of the current situation, while its Spring Forecast will be published at the end of March.

He added that, as of now, there was “no reason” for the Government to change its economic plans.

Mr Harris said: “I mean, let’s have a sense of perspective here. We had an a very significant intervention in the Gulf, in the Middle East at the weekend.

“It’s a conflict that’s a couple of days old. The longer the conflict goes on, the greater the economic risk there is to the global economy, which Ireland is obviously a part of.

“Where the focus now needs to be on is everything that can possibly be done at an international level to de-escalate.”