THE UK’S DECISION to implement a price cap on energy bills for the next two years could bankrupt its economy, Michael O’Leary has said.  

British Prime Minister Liz Truss announced a price cap on energy bills earlier this month, but the move was not met with a commitment on how the government would pay for it. 

O’Leary said the move was “nuts”.

“You can’t have an energy guarantee for two years, that is completely uncosted. I think it could bankrupt the UK economy in the next two years. We have been there with the bank guarantee and we can’t go back there again,” he said.  

O’Leary was speaking at a reception in Dublin to celebrate Ryanair’s 35 years in business.

Tánaiste Leo Varadkar was in attendance and he also criticised the British government’s mini-budget, which has led to pointed interventions by the IMF and Moody’s in recent days.  

Defending the Irish government’s approach to the budget, Varadkar said:

Interest rates aren’t just rising for people, they are rising for governments too, and we wanted to make sure that the budget stayed within certain parameters. We’d prefer not to go into deficit or go to the bond markets other than having to refinance existing debt. 

He added: “And I think that is the right approach. We see a different approach in different parts of the world and how that has backfired. That hasn’t happened in Ireland.” 

Varadkar, however, said he was not too worried about the potential impact the British economy could have on Ireland.  

“I’m not unduly concerned about the situation in the UK, but we are obviously paying attention to what happens. It is our nearest neighbour and one of our biggest trading partners, just as [would be] the case if the United States or the Eurozone goes into recession, we are looking closely at the situation in other countries.” 

Price cap

Responding to opposition criticism, Varadkar said a price cap on energy bills only “gave the illusion of certainty”.

“If you have a pure energy cap, the government has to be willing to say that we will pay for anything above that limit and that cannot be costed. It’s very risky and ultimately it’s taxpayers money and would be a blank cheque to energy companies,” he said.  

O’Leary also praised the move by the irish government to raise the band on the upper rate of income tax, something that has been criticised by left-wing think tanks and opposition parties as being inequitable. 

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People will now pay the top rate of tax at €40,000 instead of €36,800. 

“Young people are coming in, they are entering the top rate of tax at €36,000 (sic), that is not the way forward for this economy. Moving up that high rate of tax, so that more people can spend more of their money and spend it on housing or whatever else. We compliment the government on moving that,” O’Leary said. 

Varadkar also defended plans by Ryanair to have ten million more passengers by 2030, saying there was no point in “climate shaming” people. 

“We have to understand that we are an island nation, it is crucial for our connectivity. We are different from mainland countries in Europe. I do believe that it is possible to embrace climate action and also maintain aviation links.”

He said this would be done through new technology, modern aircraft and new synthetic aviation fuels. “That’s what we should aim to do,” he said.