Taoiseach Micheál Martin left an EU summit which imposed tougher sanctions on Russia with a warning of higher energy prices for the foreseeable future, adding that the Government needed “to be honest with people” about the difficulties to come.
Mr Martin warned that higher oil and gas prices were inevitable but also ruled out providing a further package of supports for households in advance of the budget in October.
He said he wanted to agree a “strategic response” with trade unions which would give people assistance in meeting rising costs without further fuelling inflation through a spate of wage demands across the economy.
Inflation figures published on Wednesday laid bare the extent of still rising costs across the euro area, with officials at the European statistics agency Eurostat reporting a record 8.1 per cent rise across the 19-country zone in May.
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After an appeal from Ukrainian president Volodymyr Zelenskiy, EU leaders agreed the sixth round of sanctions on Russia, though with protections for countries such as Hungary which get most of their oil through pipelines from Russia. EU leaders said these fresh measures would cut by two-thirds the amount of money the EU sends to Russia for oil.
Speaking after the agreement, the Taoiseach said that Europe was now entering “fairly rocky territory in the years ahead in terms of pricing around fossil fuels”.
“We cannot get away from that,” he said. Asked if high prices for oil and gas were here to stay, Mr Martin said, “One is looking at a different era now in pricing for fossil fuels.”
Speaking later after the summit had concluded, the Taoiseach said Ireland was “not that dependant” on Russian oil, but acknowledged that the EU move would affect the overall energy market and that “prices will go up”.
“Clearly there is an energy crisis out there the like of which we haven’t seen for some decades. That is the reality and I think we have to be honest with people,” he said.
Mr Martin said the “only way out of this” for Ireland was to “really expand significantly and dramatically our renewable performance”.
“That’s the only way ultimately. That’ll take quite a while to get done, but it’s a work in progress. It’s not something we’re just starting,” he said, adding that the “existential crisis of climate change is such that we really have to move anyway”.
He said that the Government had begun discussions with trade unions about responding to the surge of inflation “because, given the circumstances we are in, a collective, society-wide response is better for the country rather than different sectors pursuing it on single issues right across the board”. He added: “I think it would be more coherent for the country to approach it in this way and that is what we will explore to see if that can be achieved.”
The mood at the EU summit was sombre, reflecting the expectations among EU leaders of a protracted conflict in Ukraine and rising costs at home. The summit was warned that the world’s most vulnerable countries could face starvation due to the disruption and destruction of food supplies by Russia.
“Russia is not only blocking the export of Ukrainian wheat, it is bombarding warehouses where wheat is stored, deliberately,” European Commission president Ursula von der Leyen told reporters. “They are also mining the fields where Ukraine could have the next harvest of corn.
“The fact that there is a severe food crisis developing is only the fault of Russia’s unjustified war. Without this war we would not have it. And we should always over and over repeat that.”
