I propose to take Questions Nos. 11, 15 and 22 together.
"Economic Review and Outlook 1991" published in August projected a GDP growth rate for this year of about 1.75 per cent and, depending on the scale and timing of profit outflows, GNP growth of about 1.25 per cent.
Since then the recessions in the UK and in the US seem to have bottomed out but, while the latest forward looking indicators in the UK are encouraging, signals from the US are more mixed. On the domestic front exports and, by implication from revenue recipts, non-agricultural employment are continuing to hold up, while business confidence is reported in the recent CII survey to have improved. However, trends in personal consumption and constuction employment remain weak.
On balance, there would appear to be no reason to expect this year's growth rate to differ significantly from that outlined in "Economic Review and Outlook". This would leave growth here broadly in line with the EC average but, in terms of GNP, would represent approximately a halving of the budget day forecast of 2.25 per cent. This lower growth essentially reflects the effects of weakened international confidence on business investment, and of a related weakening in domestic confidence on personal consumption and construction. Irish economic fundamentals remain sound.
Lower growth has had a direct impact on the budget arithmetic. The impact on indirect tax receipts was particularly marked both because a lower than expected volume of personal consumption represented a significant part of the total growth shortfall and because the fall-off in consumption was particularly concentrated in expenditure on motor vehicles. Together with the unexpectedly sharp increase in the number on the live register as migration patterns changed, this is one of the main reasons the current budget deficit for 1991 is likely to be in the region of £400 million, some £150 million above the budget estimate. This is broadly in line with the Government's expectations on 19 July last when introducing a corrective package to deal with the emerging situation. I am satisfied that in this very difficult year the current deficit has been contained within reasonable limits.