A rise in earnings over the past year has outpaced inflation, leading to some improvement in living standards. give some insight into why so many voters gave their support to the main parties in the outgoing government. There will be a strong rise in real earnings this year – in other words pay is rising ahead of inflation. This comes after a couple of years when earnings did not keep pace with price increases.
Whatever precise shape the new government takes, these trends point up some important issues. The most obvious is the potential impact of geo-political events – the Russian invasion of Ukraine was a significant factor pushing up inflation. In an uncertain world, and with Donald Trump due to take office in January, room for manoeuvre in the public finances is vital. It served Ireland well through the pandemic.
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