The two budget Ministers and the leaders of the Government parties received “sobering” briefings on the implications for the Irish economy of an EU-US trade war, people familiar with the exchanges have said.
The Taoiseach and the Tánaiste, as well as Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers, met at Government Buildings on Monday evening for discussions on next week’s summer economic statement and the revised National Development Plan (NDP).
Sources said a series of decisions on the NDP are still to be made, and it is understood a series of additional leaders’ meetings, including one at the weekend, will be needed to sign off on the two plans.
It is also understood that economic projections underpinning the plans may be confined to one year, given the high uncertainty of the international environment.
RM Block
One source familiar with the exchanges on Monday evening said the briefings by senior officials were “grim”. Another described the potential outlook as “sobering”, with the possibility of a full-scale trade war looming. But even if a trade deal is agreed, the Irish economy and public finances are vulnerable to several threats, the meeting was told.
The deteriorating prospects for the Irish economy are informing the Government’s resolve to deliver a much more cautious and restrained budget this year, starkly different from the giveaways of recent years and without any package of one-off, cost-of-living benefits.
However, there is also a growing awareness in Government circles of the potential political costs of a more cautious budget.
Yesterday in the Dáil, Sinn Féin leader Mary Lou McDonald gave notice that she intends to target the Government for the lack of a cost-of-living package. She said people “desperately need” help.
She told Taoiseach Micheál Martin: “People are being fleeced now today, when they open their electricity or gas bill, when they get to the checkout with the weekly shop, when they go to fill the car and when they go to buy basic toiletries like toothpaste or shampoo.”
Mr Martin said the Government has to be “prudent ... We have to be cautious and careful in terms of the resources that we have. And I know everybody wants us to spend billions, but that is not open to us.”
He also said that, “while the European Union will continue to work for an agreement, it will also continue to prepare for other outcomes”.
Mr Martin said a US-imposed 30 per cent tariff is “untenable and sustainable” and would mean economic decline and job cuts.
[ Trump’s 30% tariffs would have ‘very severe impact on economy’ - TaoiseachOpens in new window ]
Meanwhile, Government figures believe the ongoing uncertainty is causing companies to delay significant investment decisions in Ireland. Senior Coalition sources said they believe companies are deferring major decisions until there is more clarity.
A source in the foreign direct investment sector echoed this view, citing feedback from clients, adding that they are uncertain if the sector would show net growth this year.
[ Focus in Budget 2026 has to be on transforming infrastructure, Martin saysOpens in new window ]
