The high cost of living is in the spotlight as we hear what’s financially in store for us next year in Budget 2025
Minimal tax breaks are on the cards though sizeable pension increases are expected with cuts too in inheritance tax also flagged early on. But whether or not these measures improve our lot, we still live very well indeed compared to our predecessors over a century ago. Let’s see how tough they really had it compared to how we live today:
State finances
There’s an old story that the Guinness brewery helped to bail out the Irish state in 1922/23 as civil war tore the country asunder. Whether true or not, there was no denying that ‘pints of porter’ played an enormous role in funding our fledgling Irish state. In fact, you could say it was alcohol-dependent.
The current Government has a similar problem with being over-reliant on corporation tax – which is heading for €27bn, or a quarter of our income.
That’s a far cry from the situation in 1922/23 with no US multinationals around and Irish firms struggling to merely survive. Back then, the corporate tax ‘take’ was tiny at just €17m in today’s money. Instead, our founding fathers were far more reliant on an even more dubious form of income – alcohol.
Ireland’s first set of accounts for the year 2022/23 shows the whole country was run for just £31m a year. Even in today’s money, that’s not much more than 2% of what we spend today. Over half of that spending was funded by €16m in excise duties on alcohol – mainly beer.
As Flann O’Brien wrote, “a pint of plain” was indeed “yer only man” – especially if you were Ernest Blythe, who was finance minister in 1923! Taxes on sugar and property attracted huge controversy when introduced here. Yet these were standard items in the 1922 budget – as were special duties on tea, matches, playing cards and, for some reason, ‘chicory’. The Irish State may have had a serious alcohol issue, but it was frugal to a fault and meticulous in its accounting practices.
For example, the Exchequer contribution from the post office is written down as 1,147,497 pounds, two shillings, ten pence and one half penny! This followed an example set by Michael Collins whose financial exploits are perhaps one of the most under-rated aspects of his wartime heroics.
A book-keeper by profession, he knew how to keep a tight rein on the purse strings and was finance minister in the First Dail, a role he retained despite also being head of the army during the civil war.
During the war of independence, he kept the national finances afloat by raising £1m from a loan note for a country that didn’t even exist yet.
Despite being the most wanted man in Ireland, he cycled his bike all over Dublin to collect this money in person, meticulously writing out receipts by hand for each sum. I don’t imagine even Green Transport Minister Eamon Ryan would do that today!
Pensions and social benefits
All eyes are on how much of a pension increase we’ll be awarded for 2025.
An increase of €12 was floated with some politicos clamouring for a €20 hike, so it’s likely to be somewhere in between. Yet, it will amount to a fortune compared to what our ancestors got, if they were lucky enough to get anything at all. In the early 1900s, dole payments did not exist – and pensions were a pittance.
Britain and Ireland only introduced an Old Age Pension in 1908, which is why it still has that slightly depressing moniker today when most people don’t feel old age has quite set in yet at 66.
Back then, it paid the princely sum of between 10p and 25p – but only if you were deemed to be ‘of good character!’
Cost of living
The cost of living is a hot political potato after rampant food inflation cost us dearly in recent years.
And much of Budget 2025 will attempt to address the issue. But our predecessors had it much, much worse than us in this regard. In 1922, 87% of spending was on food, clothing, rent and fuel & light, one CSO study shows.
A century later the ratio was only around a quarter as our finances vastly improved providing discretionary income for luxuries and leisure. In today’s money, back then working people had to live on incomes less than half of what we would get on the dole or in our pensions.
Yet their grocery bills were more expensive, though not for everything. A pound of beef was cheaper at €4.48 in today’s money, compared to twice as much now for even the cheapest cuts. Milk cost €1.49 a quart, which is just under a litre, compared to just over a euro today.
Surprisingly, fresh milk was in short supply – in a country where cows are certainly not.
“Fresh milk was hard to transport and store as there was very little access to refrigeration 100 years ago,” the CSO explains. Flour and oatmeal weren’t far off today’s prices at €1.49 per and €1.68 respectively per kilo.
However, tea was pricey. In 1914, “best tea” cost the equivalent of €19.42 per pound, while a pound of “cheap tea” would set you back €11.94, the CSO shows. The equivalent today would be buying Barrys Tea at €16.36 a kilo in Aldi – versus the discount supermarket’s own brand product for €4.90 a pound.
So while ‘best tea’ is only a fraction cheaper today – cheap tea is less than half the price it was in 1914.
Butter cost around €9 a pound, while eggs were €6 – many times what they cost today.
So, whatever is in store for us financially in 2025, spare a thought for the poor shoppers of yesteryear!
Veteran personal finance journalist Bill Tyson writes for the Irish Mail On Sunday and has three national media awards under his belt. Formerly Personal Finance Editor of the Irish Independent and reporter on RTE’s The Consumer Show, Bill will have lots to say about how to make the most of your money in our new SeniorTimes podcast series in the coming months.
