The Government has confirmed that the planned increases to fuel excise duty due to take effect on September 1st and October 1st will not go ahead, and the Dáil is to be recalled on Friday to approve the decision.

In a statement issued from Government Buildings on Friday, the Government said the Taoiseach, Tánaiste and Minister of State Seán Canney agreed that the planned increases will not now proceed. The statement said that while a pathway to gradually restore rates to pre-reduction levels had been set out in June, "it is clear that in the intervening period there has been a change in the global situation and as a consequence the cost of petrol and diesel for consumers." It added that the Government would agree the next steps next week and that "ultimately the greatest economic intervention we can see is de-escalation in the Middle East."

The decision marks a reversal of the phased removal of temporary fuel excise cuts introduced in April as part of a €750 million support package in response to national fuel protests. The first stage of the phase-out, due on September 1st, would have added 9 cent to a litre of petrol and 10 cent to a litre of diesel, with further increases scheduled for October, November and December. The excise cuts had reduced the price of a litre of diesel by 32 cent and petrol by 27 cent, and had been due to be unwound between September and December.

The Dáil will now reconvene on Friday, ahead of its previous resumption date of Wednesday, September 16th, to vote through a financial resolution to pause the planned increases. The resolution will be tabled by Minister for Finance Simon Harris. Ceann Comhairle Verona Murphy notified TDs on Friday that the Dáil would meet next Friday at noon on foot of a request from the Taoiseach. Five sources with knowledge of discussions said a recall was likely, with next Friday targeted as the sitting date.

The move comes after pressure from Coalition backbenchers and the Opposition. Last Thursday night, Sinn Féin leader Mary Lou McDonald wrote to Taoiseach Micheál Martin demanding that he recall the Dáil to vote on delaying the first stage of the reversal. Wicklow-Wexford TD Brian Brennan told BreakingNews.ie that the phasing out "should be stalled," saying he had had numerous conversations on the matter with Tánaiste Simon Harris. Fianna Fáil MEP Barry Cowen said the decision had not been "forced."

Minister for Enterprise Peter Burke said the cuts "can't go on indefinitely" and that any action pushing prices beyond €2 per litre would "cause very significant distress on families." He said the Government is "well used to taking intense pressure" and must do what's right for the country. He confirmed that Cabinet is awaiting a memorandum from the Finance Minister outlining "scenarios that will have to be brought forward." Burke said the reduction in excise has reduced inflation by about 0.6 per cent.

The cost of maintaining the excise cuts has been estimated at about €100 million a month, according to sources, with the Revenue Commissioners putting the figure at about €100 million per month. The income foregone will not affect the size of the forthcoming budget, which remains at €8.5 billion, with €1.5 billion earmarked for tax-reduction measures; the costs will be met by reducing the surplus the Government plans to run this year. The Budget is scheduled for October 6th.

Minister of State Seán Canney said the Government would keep the restoration of the excise cuts under review while the geopolitical situation remained uncertain, and said the Dáil would be recalled for one day to approve the deferral. He said the initial introduction of the cuts was not a "kneejerk reaction."

This is the second postponement of the fuel-price increase, following a similar decision in June to extend the cuts beyond August 1st. Ministers have been wary of the potential for a repeat of the fuel protests that brought parts of the country to a standstill in April, and are conscious of the impact of rising prices at a time when families are squeezed by back-to-school costs. With diesel prices currently in the low €1.90s, the now-paused reversal next week would have brought the price above €2 per litre, seen as a tipping point. There is general agreement among Ministers that the Government could not be responsible for bringing the price of petrol or diesel above that level.

Labour finance spokesman Ged Nash said the Dáil recall was predictable and brought this "sham fight" to an early close, accusing Fine Fáil and Fine Gael of "gaslighting of PAYE workers." The fuel industry lobby Fuels for Ireland welcomed the decision, with chief executive Kevin McPartlan saying it "averts immediate risk of pushing diesel prices above €2 per litre and triggering renewed fuel protests," but he criticised the lack of a long-term strategy, saying it addresses the immediate problem but not the "fundamental weakness" in Ireland's approach to fuel pricing.

According to Government sources, the reversal of the excise cuts is still expected later in the year, dependent on global fuel prices dropping, with a review of pricing likely before any future reversals. No decision has been made on increases in November and December.