According to the Finance Minister, if US trade penalties are implemented in early April, tens of thousands of employment in Ireland may be at jeopardy, reports RTE.
According to Paschal Donohoe, “it is very possible that between 50,000 and 80,000 jobs that would have been created or kept within the economy won’t be” in the medium term, which is the worst case scenario.
He added that if high tariffs are imposed, the government’s planned income tax cuts might not be implemented, reports RTE.
A worldwide trade conflict would affect people’s living standards, and the government may need to make decisions to safeguard the public finances, Minister Donohoe said on RTÉ’s This Week program.
On April 2, the United States threatens to impose up to 25% tariffs on goods originating from the European Union.
Minister Donohoe said that it would depend on the size of the tariffs, how the rest of the world reacts, and whether they are temporary or permanent when asked if they may cause a recession in Ireland, reports RTE.
According to him, “it is very possible that between 50,000 and 80,000 jobs that would have been created or kept within the economy won’t be” in the medium term, which is the worst case scenario, reports RTE.
He said that there may be a 2%–4% effect on GDP.
Minister Donohoe went on to say that it was critical to be truthful about the current level of danger, reports RTE.
Some people’s jobs may be in jeopardy, he acknowledged, but the government would be handling that risk from a position of almost full employment.
It is hard to predict exactly what it will imply for living standards in the future, but it will affect living standards in a global trade battle, he added, reports RTE.
When asked if the government would offer assistance to businesses or industries most affected by tariffs, he said it could be challenging to put together a sizable help package.
“We could find ourselves in a situation where we’re seeing tax revenue not growing the way it has in the past, exactly at a time when an economic issue is developing,” he said, reports RTE.
“So while we would want to offer support and be of help, what we won’t be able to do is bring in the kind of economy-wide pandemic support that were in place in the past, because we will need to keep safety in our public finances and preserve our economy over the medium term. There will be other choices that we will have to make. Those choices could mean current spending, not growing the pace we were anticipating. It could also mean we have to make changes in relation to taxation, because we have to prioritise the keeping of jobs and the retention of the competitiveness of our economy,” reports RTE.
He said that although personal tax cuts were part of the election agenda, “that would not be the right thing to do” in the event of an economic crisis.
Once the size of the tariffs is established, he added, the government would release an economic prognosis in April, reports RTE.
The EU would “respond back” if the US imposed wide duties, according to Minister Donohoe, who is also the president of the Eurogroup of Finance Ministers.
“And if that were to happen, it will mean difficulty, but that difficulty is caused by the application of the US tariffs in the first place,” he said, reports RTE.
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