Ireland ‘could be forced to borrow next year’ if oil prices keep rising, says top economist

If the closure of the Straits of Hormuz continues Ireland could face a serious recession, with the Government having to borrow money next year.

That is according to adjunct professor at Trinity College Dublin and research affiliate with the ERSI John FitzGerald, who outlined possible impacts of a continuing energy crisis to TDs and Senators on Tuesday.

FitzGerald told the Oireachtas Committee on Budgetary Oversight that if oil prices reached $140 (€120) a barrel, Ireland would be worse off by €7.5 billion, or 2.5 per cent of national income.

“If oil prices rose to over $200 a barrel, the hit to Ireland would approach €15 billion or 5 per cent of national income,” he said.

He also predicted that if the effect of the energy crisis reduced world output by 3 per cent, “Irish national income and consumption would fall by at least 3 per cent in real terms, adding significantly to unemployment, with inflation rising well above 5 per cent”.