Pension and welfare payments will have to go up over €5 per week to ease cost of living, says Leo

Budget 2022 was last year nicknamed the ‘fiver Budget’ with pensioners, fuel allowance and social welfare recipients seeing increases of €5 per week.

However, Leo Varadkar has now said that due to the spiralling cost of living and the “good nick” of the state of the economy, increases will have to be higher this year.

“We had the biggest social welfare package in many years last year,” he said.

“But that was on the basis that inflation was running at around 2pc to 3pc. Inflation is now running at around 7pc to 8pc.

“I think it stands to reason that pension increases and the social welfare package will have to be greater in 2023 than they were this year. That’s only right, the cost of living is rising and the economy is in good health.

“Trade is breaking all records and the public finances are in pretty good nick.”

He told the National Economic Dialogue (NED) in Dublin that there will “of course have to be a substantial welfare and pension package greater than that of 2022” of which the “scale and detail has yet to be determined”.

Mr Varadkar also said pensioners and those on social welfare are the “hardest hit by inflation”.

“People in rural areas are more affected that those in urban ones,” he said.

He told reporters that Government is now focusing on cost of living measures for Budget Day and said that some may immediately kick “overnight” once they are announced in October.

“We want to focus now on a package for Budget Day. But those are measures that could come into effect almost immediately, the days after the Budget in October for example and others that would then take effect next year.

“A lot of the weekly rates can be increased by ministerial order, (and it) doesn’t require legislation to go through the Dáil, so that can be done more quickly; the tax measures for example.

“Sometimes, the tax measures are done on [Budget night].”