Rein in spending as crisis buffer – Makhlouf
The Central Bank’s governor Gabriel Makhlouf has said that building economic resilience is not optional in the face of a rapidly shifting global order.
In his 2026 annual letter to Minister for Finance Simon Harris, the Central Bank chief outlined a roadmap designed to shield Ireland’s small open economy from geopolitical tensions, trade fragmentation, and technological disruption.
Governor Makhlouf urged the Government to move beyond reactive policies, identifying critical areas where Ireland must build buffers to withstand international shocks:
- Infrastructure surge: rapid delivery of housing, transport, energy, and water projects to expand the economy’s supply-side capacity,
- Indigenous strength: Scaling up local businesses to provide a sturdier counterweight to the country’s heavy reliance on Foreign Direct Investment (FDI),
- Fiscal discipline: Prudent fiscal policy and strict spending controls to ensure the State has the financial firepower to handle future crises,
- Household empowerment: improving retail participation in financial markets and ensuring domestic firms have better access to debt and equity financing,
- New global rules: Active collaboration with European partners to forge new multilateral trading rules that offer stability in an era of increasing protectionism.
Frontiers
The Central Bank supervisory priorities have switched to high-tech and high-risk frontiers.
Makhlouf highlighted four strands:
- Macro-financial stability: strengthening the operational armour of the financial sector against geopolitical volatility,
- Consumer safeguards: full implementation of the revised Consumer Protection Code and a crackdown on sophisticated financial crime,
- Tech transition: A dedicated focus on artificial intelligence in financial services and the launch of the second innovation sandbox for payments,
- Climate accountability: rigorous assessment of how financial firms are preparing for severe weather events and the broader green transition.
The Central Bank also confirmed that it would move forward with access-to-cash legislation and release a major discussion paper on the tokenisation of financial assets later this year.
Internal barriers
The governor criticised the internal barriers within the EU single market – which he estimated were equivalent to a 45% tariff on goods and a 110% tariff on services – and called for the completion of the Savings and Investment Union.
"Europe should act on the basis of its strengths and its potential," Makhlouf stated, arguing that the bloc must close its innovation gap and accelerate decarbonisation to remain globally competitive.