People need to "avoid the paradox of thrift" and spend more to revive economy, says Leo Varadkar 1 month ago

People need to "avoid the paradox of thrift" and spend more to revive economy, says Leo Varadkar

"We need to avoid the paradox of thrift, in which people who have a bit of money are afraid to spend it."

Tánaiste Leo Varadkar has said that people need to "avoid the paradox of thrift" and spend more over the summer to help revive the Irish economy in the coming months.

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Varadkar said that he believed the economy could "take off like a rocket" in the coming months as people should be encouraged to spend the 12 billion euro that households have saved during the pandemic.

"The 12bn households have saved because of the pandemic will result in people spending more on things they missed out on over the past few months like new clothes, household items, week-ends away, home repairs, and nights out," he said to the Sunday Independent.

"They should not be discouraged from doing so. We need to avoid the paradox of thrift, in which people who have a bit of money are afraid to spend it."

Varadkar added that spending more will help people get back to work and "save many businesses from failure", as well as helping to free up new lending.

"Spending it will help those struggling get back to work and save many businesses from failure," he told the publication.

"Some will use it to pay down debts and that's good too as it will free up new lending for others who need it."

It comes as Varadkar also said last week that the future of the Irish economy is digital and is "not going to change back" due to the impact of the Covid-19 pandemic.

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Speaking in the Dáil on Thursday, the Tánaiste said that the pandemic has "accelerated" the future of the economy by about 15 years.

"We always knew it, but I think the pandemic has accelerated it and I think the future of our economy is going to be green and is going to be digital," he said.

"The world has changed in the last year or two, we have probably come on 15 years in terms of the digital transformation."