Other Questions

Economic Growth

Mary Lou McDonald

Question:

6Deputy Mary Lou McDonald asked the Minister for Finance his views on whether GDP will grow by 1.3% this year; his response to the Fiscal Advisory Council who doubt that this figure will be reached; and the contingency plans that he has in place in the event that this target is not met. [19306/12]

At budget time, over four months ago at this stage, my Department projected that the economy would expand by 1.3% this year, which was in line with the prevailing consensus at the time. The Irish Fiscal Advisory Council, in its recent report, outlines that the macroeconomic forecasts underpinning the budget were appropriate at the time. However, the council also outlines that the recent data, both Irish and international, mean that this projection is now on the high side and points out that other forecasters have recently revised downwards their projections for growth in the Irish economy this year. The council also acknowledges there is a high degree of uncertainty regarding prospects for the Irish economy.

In terms of the macro forecasts, I broadly share the view of the council, that is to say, the forecasts were appropriate at the time of the budget but developments since then have been a little disappointing. Officials in my Department are assessing all available information with a view to publishing revised forecasts at the end of this month in the stability programme update.

Turning to the public finances, this year's general Government deficit must not exceed 8.6% of GDP. Budget 2012 forecast the 2012 deficit at 8.6% of GDP. It is worth noting that the troika's forecast is also for a deficit of 8.6% this year, but based on a lower estimate of GDP than my Department projected at budget time.

The end-March Exchequer returns show that taxes have made a good start to the year, performing better than expected in the first quarter and close to 4.5% ahead of profile on an underlying basis. This is a welcome development as we strive to reduce further the deficit in our public finances. While voted expenditure showed some pressures, I am confident it will be actively managed within agreed limits and I know the Minister for Public Expenditure and Reform will be stressing upon colleagues the importance of adhering to the 2012 spending targets, as was done in 2011. As I stated at the time of publication of the first quarter returns, the figures illustrate that we are on track to meet our deficit target this year.

Given that growth figures are probably the most important determinant of the success of the Government programme, and in my view and that of many others it is the one that actually receives the least amount of attention and investment, and given that growth projections have been revised down three times, most recently by the Irish Central Bank, is it not the case that the Government is at this stage in danger of not meeting its obligations with regard to the troika? What contingency plans has the Government put in place in case this happens? Might there be a situation where a mini-budget is necessary if those obligations are not achieved?

I am quite confident that we will meet our target of 8.6% on the deficit this year. Budgets are built not on real growth but on nominal growth, because it is nominal growth that generates tax. The nominal growth we built the budget on was 2.5%. Even with a growth rate of 0.7%, which is on the average and is where the Fiscal Council is coming in, the inflation rate as last measured by the CSO was 1.8%, so the nominal growth is still 2.5%, which is what the budget is based on. In addition, 2011 ended up better than expected and the outturn was below 10% against a target of 10.6%. Therefore, we are quite confident, with tax revenues well ahead for the first quarter. While there are some problems on the expenditure side, my colleague, the Minister, Deputy Howlin, is dealing with that and ensuring Departments stay within budget.

The Deputy can forget about mini-budgets and all that kind of stuff at this stage. A better line of attack would be that if growth rates go down, then activity in the economy slows down. This does not necessarily impinge on our budgetary targets but I would like to see greater activity in the economy. Our model is export-led growth, so we are very dependent on how the economies in our customer countries are performing. The mark-down is not due to anything that went wrong in Ireland. It is the consequence of things going wrong across Europe, in China and in the United States. However, we believe there will be a better second half to the year.

There are many issues I could take up with the Minister. Given the fact Europe has gone into a double-dip recession, putting all the eggs in the export growth basket is causing difficulty, according to the figures. The Minister must have an idea of a tipping point growth figure, whereby if growth went below that figure, major difficulties would arise and a mini-budget would be necessary. If the Minister does not know that, there is a major difficulty because it is important that level of knowledge is inherent in Government. In the interests of transparency and clarity, will the Minister identify what the tipping point growth figure is that would cause such an eventuality?

We had three years of continuing decline where the economy in nominal terms went down by about 20%.

I am talking about the last two quarters.

In our first year in Government, 2011, the economy grew by about 1% and it is growing again this year. As long as the economy is growing, we are getting out of the problems we are in and we are driving forward. The Deputy cannot question that but he can question the pace of the recovery. If we have to mark down growth figures, it slows the pace. I would prefer if the economy were growing faster but there is nothing we have done or nothing that is intrinsic to the economy at present which is reducing the growth forecast. We are importing consequences from other economies and, as our model is based on export-led growth, events across Europe are very important, as is sentiment in Europe, the UK and the US, as these are our big customer countries.

This is very difficult to understand. The Minister seems to be saying that a downgrading of growth projections does not have consequences in terms of likely increased austerity, and he seems to be very sanguine, if one likes, about the downgrading of growth projections. Does the Minister accept that downgrading the growth projections has something to do with the extreme depression in the domestic economy resulting from the impact of austerity? The Minister suggests that the key issue is what occurs in the rest of Europe and in our export markets and so on. Is the point not that growth projections are now being downgraded because the same austerity is being imposed in those countries, shrinking the potential markets for our exports? This appears to be confirmed by emerging figures for January and February which suggest that our trade surplus has reduced substantially in these months. Are these not worrying indications that austerity is simply not working, that it will kill off growth and that it will require yet more austerity from the Minister and other Governments throughout Europe to meet their targets?

I assure the Minister that Fianna Fáil does not share Sinn Féin's appetite for a mini budget. I believe we stand a good chance of meeting our fiscal targets this year. As the Minister is aware, 2012 and 2013 will be more difficult. Some €90 million must be found this year because of the fallout from the promissory note arrangements and the shortfall on the household charge may amount to €40 million or €50 million when the dust settles. This means there will probably be a shortfall of €130 million or €140 million from these two issues alone. Where will the money come from?

One could pick any figure but one should examine the matter in its overall context. We expect to collect approximately €36 billion in taxes in 2012. Already, we are almost €400 million ahead in the first quarter. Let us consider the debt servicing costs. I have explained the €90 million additional cost on the promissory note. The debt servicing costs for the first quarter are €70 million below the estimate. One is dealing with swings and roundabouts all the time and one cannot be absolutely precise. Deputy Boyd Barrett should note that one cannot be precise about trade figures. Let us consider the February trade figures. There are 28 days in February and 29 days when it is a leap year. If a large settlement comes in on 1 March, it is reported in the March figures. One cannot hang one's hat too much on one month's figures; one must consider it overall.

We marked down growth rates. I do not interfere with the forecasting unit in my Department. It is independent in its assessment of the data. I expect it will mark down the figures again at the end of April. I am simply suggesting that from a fiscal point of view we will still meet our targets. Naturally, if growth is lower it will have an effect on the overall economy.

The Deputy's analysis is always based on an idea of Keynesian economics. The Deputy's whole focus is on demand-led initiatives. He appears to take no cognisance of the supply side of the economy. Much of what we have done involves supply side initiatives because we do not have the wherewithal to carry out a demand stimulus. I agree with the Deputy without gainsaying. If I had several billion euro and I could use it to stimulate demand, I would have a list of projects in my pocket to which I could put it quickly. However, we must play the hand of cards we have. We can play strongly on the supply side and we have done so. Let us consider what we did in the tourist industry earlier in the year. Everyone is aware that had a considerable effect on the restaurant trade. The 21 small initiatives related to the financial services industry in the Finance Bill are beginning to have a small effect. We will proceed in this way. I hope we can encourage our European partners to loosen the purse strings and follow up the rhetoric of growth and jobs with specific proposals. This is becoming centre stage in Europe now. We will welcome this with open arms and we will have shovel-ready projects for any money we can get.

Fiscal Policy

David Stanton

Question:

7Deputy David Stanton asked the Minister for Finance with regard to the taxation of diesel, if he will consider or has considered the introduction of specific measures to support the haulage industry, as per section 19 of EU Council Directive 2003/96/EC; and if he will make a statement on the matter. [19257/12]

The Deputy may be aware that a working group was set up between officials of my Department, the Irish Road Haulage Association, IRHA, and some Members. The working group is discussing several issues of concern to the haulage industry. The Deputy will understand that I cannot pre-empt the outcome of these discussions, which are ongoing. A fuel rebate system, as sought by the IRHA, could not under EU law be restricted to Irish licensed hauliers but would have to be extended to all vehicles intended exclusively for the carriage of goods by road with a maximum permissible gross laden weight of not less than 7.5 tonnes. In addition, the rebate would have to include the carriage of passengers by a motor vehicle of category M2 or category M3 as defined in Council Directive 70/156/EEC.

I thank the Minister for his response. The question was prompted by a call from an owner of a haulage business who employs more than 50 people. He has informed me that he will have to let them all go shortly because the pressure of costs is becoming unbearable. He cited problems with washed diesel undercutting his business as well. He said he would not have contacted me except that the matter was most urgent. He said his business is on life support. Is it possible for the Minister to give any indication of when the working group will finish its deliberations? When will it be in a position to report? Does the Minister have any information on the impact on the haulage industry caused by the high price of diesel and the illegal washed diesel on the market?

It would be a mistake to time-limit discussions of a working group so I will not put a time limit on it. However, there appears to have been a good exchange of views to date as well as serious discussions on the proposals made by the Irish Road Haulage Association. Irish hauliers are impacted in the same way as those throughout Europe. Diesel and petrol prices have gone up throughout Europe. In comparison with our nearest neighbours in the United Kingdom the imposition of excise on diesel and petrol in Ireland is significantly lower. VAT on diesel and gas can be reclaimed while VAT on petrol cannot be reclaimed by hauliers but most of the lorries use diesel. The option to reclaim is available. The argument that an increase in the VAT rate is having an added imposition is questionable. Perhaps there is an imposition on cash flow but not on the bottom line because those involved can reclaim it.

It is a competitive business. At the same time there is a good deal of extra business because of the increase in exports. There is a good deal of hauling to the ports and into Europe but it is competitive business. Those who require the services of hauliers have cut margins because it is so competitive. The talks are ongoing.

I thank the Minister for his comments. I imagine the Minister will agree that this is an important business and that many of our exports depend on it. They are also competing with companies that have their origins in other EU countries. Will the Minister comment on the phenomenon of washed diesel? What is the extent of it? What is it costing the Exchequer annually?

It is difficult to say what it is costing the Exchequer annually but certainly there is widespread abuse. The Deputy will recall that I took measures in the Finance Bill to ensure there will now be full traceability of diesel and petrol from the point of import through to the point of sale. Previously a licensing system was in place if one was providing diesel to pumps. However, if one had a business in which one was providing central heating diesel or green diesel to the farming community, no licensing was required. The was a gap in the traceability and that gap has been filled in by the Finance Bill. The Revenue requested this and suggested that it was an important measure to crack down on the laundering of diesel.

I wish to bring up a related point and broaden the issue to ordinary consumers and motorists. The price at the pumps has reached a crippling level of approximately €1.70 per litre of petrol. Since VAT is the last element to be added to the price - it is applied to the excise-inclusive price of diesel and petrol - it is yielding a windfall for the Exchequer. Does the Minister have any plans to examine the issue and give some relief to motorists who are dealing with exorbitant fuel prices at present?

This came up in Europe in the crisis in 2004 and again in 2007 and 2008. There is agreement throughout the community that when there are spikes in the price of transport fuels Governments will not alter the taxation element. What the Deputy is saying about VAT is correct, namely, that it applies to the total price. However, the increase from 21% to 23% at budget time, with petrol selling at approximately €1.50 per litre, amounted to an add-on of approximately 3 cent. I accept that this goes on the total price at the end, so it is more like €1.70, but the point is that the spike is not due to tax increases. We imposed no excise increase on diesel or petrol in the last budget. There was a 2% VAT increase and a €5 carbon charge per tonne, which equated to approximately 1.5 cent on a litre. Rather than tax increases, it is international events, in Iran and in the Middle East in general, that are driving the cost of fuel. There is a spike at present and it is very difficult for people. It should also be noted that there is no windfall for the Exchequer as a result of these increases. What happens is that people who have to use their car to get to work will make savings elsewhere. In other words, they are spending more on fuel and less on something else. While the Exchequer takes an additional amount on VAT from fuel, it loses VAT on other parts of the spending profile.

Banks Recapitalisation

Richard Boyd Barrett

Question:

8Deputy Richard Boyd Barrett asked the Minister for Finance the position regarding the ongoing negotiations with the ECB on the repayment schedule of the promissory notes; and if he will make a statement on the matter. [19315/12]

Bernard J. Durkan

Question:

10Deputy Bernard J. Durkan asked the Minister for Finance the extent to which it has been possible to engage with the EU, IMF and ECB in the matter of any restructuring or other easement of conditions arising from liabilities associated with promissory notes in respect of the former Anglo Irish Bank or other liabilities arising from the memorandum of understanding wherein it might be possible to reduce the imminent impact on the economy and consequent benefit to economic recovery; the extent to which such message has been favourably received by his EU counterparts; and if he will make a statement on the matter. [19299/12]

Thomas P. Broughan

Question:

26Deputy Thomas P. Broughan asked the Minister for Finance the current status of negotiations to restructure the Anglo promissory notes in view of the deferral of the 31 March 2012 promissory note payment; and if he will make a statement on the matter. [19296/12]

Patrick Nulty

Question:

29Deputy Patrick Nulty asked the Minister for Finance if he will provide an update on efforts to renegotiate the Anglo Irish Bank/ Irish Bank Resolution Corporation Limited promissory note; and if he will make a statement on the matter. [15185/12]

I propose to take Questions Nos. 8, 10, 26 and 29 together.

The Government has been committed to reviewing the arrangements that were put in place to capitalise Irish Bank Resolution Corporation, IBRC, formerly Anglo Irish Bank and Irish Nationwide Building Society. The purpose of this review is to determine whether there is a way to reduce the overall cost to the State. Part of the capitalisation of IBRC was provided using promissory notes as consideration. While the development in regard to the end of March promissory note payment is positive, we must continue to work toward the greater benefits that would derive from the re-engineering of the note. There are potential improvements for the banking sector which could also stem from the ongoing technical discussions.

It is for these reasons that we must look at the recent developments as an initial step in a process. This is a medium-term project. The Government is focused on developing an alternative solution to the promissory note arrangement for IBRC. It is too early at this stage of the process - indeed, it would be inappropriate - to predetermine what a successful outcome will look like or to indicate how the various stakeholders have reacted or may react to various proposals. We want to arrive at a successful conclusion that is in the interests of Ireland and the EU.

On the basis of what the Minister is telling us it is difficult not to see this entire negotiation and the debate around it as a complex accountancy trick to convince people that progress is being made on this issue when, in fact, very little is happening. If I understood correctly, he said we do not have to borrow the €3.1 billion this year but that this will have an effect on our deficit to the tune of some €90 million. Will the Minister clarify whether that is the consequence of this rather complex arrangement? If our deficit is increased as a result, does this mean there will be a corresponding requirement for additional cuts in expenditure in order to meet our deficit target of €8.6 billion? Setting that aside, does he accept that whatever deal he is pushing for will make absolutely no difference in terms of the austerity being imposed on ordinary people? He is essentially confirming the Government's commitment to pay Anglo Irish Bank's €30.6 billion in gambling debts, plus interest, while merely expressing the hope that this interest, pending negotiations, will be somewhat reduced over time. Not only has he confirmed the Government's intention to repay all of the bank's gambling debts but the period for which the Irish people will be subject to austerity, which is further enshrined in the fiscal compact, will be extended. The reduction in our debt to GDP ratio which is required under the compact will be affected by the fact that this €3.1 billion is simply being kicked down the road. Does the Minister accept there will be no let-up in austerity but instead an extension of the period of austerity?

It is difficult to reply to that contribution, but I will try to do so. There are two policy streams involved here. First, we must get to a point where what we collect in tax matches what we spend. As long as we are running deficits, there is a large gap between the two. That is the fiscal side of it, and we have committed to reducing the deficit to €8.6 billion at the end of this year, to below €7.5 billion next year and to 3% of GDP by 2015. The other aspect is that we want to return to the markets and to be able to borrow again and repay our debt. One influences the other, but the promissory note issue is really about the sustainability of the Irish debt position and improving our possibility of returning to the markets rather than having much to do with the annual budget.

It is true that an extra €90 million will have to be paid as a result of the arrangement, which must come out of the 2012 figures, but there is no need to make any adjustments because we can cover this amount, as we see it at present, within the figures in the budget. As such, there is no question of any additional expenditure cuts. As I said already, debt servicing in the first quarter is €70 million behind where we estimated. There is always slight movement on figures within the context of a budget which comprises €36 billion in tax plus a significant borrowing requirement after that. In that context, €90 million is within the swings and balances of the budgetary position. We will not be making policy decisions as a consequence of this deficit adjustment other than that we are aware of it and it must be paid.

I apologise for being late for Question Time; I was in a committee meeting. I acknowledge the progress made to date as a result of the very tenacious stance the Minister and Government have adopted in regard to this issue. Is it possible to speculate at this stage as to the alternative options it may be possible to pursue in the context of a potential restructuring of conditions attaching to the promissory notes, having regard to the likely support for same from other member states, particularly those in the eurozone?

As I have said on several occasions, we are pursuing the possibility of achieving a full deal on a replacement of the promissory note with a mechanism which would, in general terms, lengthen the period of repayment and reduce the interest rate to make it significantly easier on the Irish taxpayer. However, we are not looking for any write-offs or anything like that, because it was made quite clear when the Greek deal was done that it was a unique arrangement for that country. Deputy Boyd Barrett asked a similar question, to which I offer an analogy. If one opts to replace a five year term loan involving very onerous payments with a type of mortgage arrangement over 25 years, one will end up paying more but the annual payments will be much less burdensome. Moreover, by the end of the repayment term, growth and inflation will have eliminated much of the burden of the debt. One should bear in mind that most national debt is not repaid, rather it is serviced by paying the interest on it and then it is rolled over. As a factor of GDP, it reduces dramatically as the years go by in a growing economy with some inflation.

Is the Minister's claim that we can cover the €90 million deficit increase as part of the swings and roundabouts of the budgetary position not slightly disingenuous? He is saying on the one hand that there is no impact and, on the other, that there is an impact but it can be covered. Another way of putting this is that we would have an extra €90 million if this were not done, which would necessitate fewer expenditure cuts. This means that however the Minister frames it, come the next budget, €90 million less will be available for expenditure on public services and the people. Furthermore, no matter how the Minister might construe it, will taking on this debt burden not have an extremely suffocating effect on the overall economy? In the Minister's discussions with the troika, have its members given him an explanation to the question asked by Vincent Browne among others? What justification, moral, economic or otherwise, have they given to the Minister for asserting the people of Ireland are obliged to pay back the gambling debts of Anglo Irish Bank?

I thank the Deputy and call on the Minister to reply.

Has the Minister even asked this question and has the troika given him an answer?

One of the most valuable things a country has is the ability to honour its sovereign signature. The sovereign signature of Ireland was given by the Government's predecessors in office at the end of September 2008. It guaranteed all the debts of the banking system in Ireland, including those of Anglo Irish Bank.

That was done by a discredited Government, which bankrupted the country.

A country that wishes to pay its way in respectable company does not walk away from its signature.

That was a time-limited guarantee and what the Minister has just stated is absolutely not true.

A question, please.

That was a time-limited guarantee and we, as the sovereign, are under no obligation to honour an expired guarantee. The Minister has just stated he is not seeking or has not achieved any write-down in the total quantum of debt.

I have not looked for it. When the Deputy uses the word "achieved", it makes it sound as though I was seeking it.

Okay. This is the question I want to ask the Minister. The Taoiseach has stated in this Chamber that in all negotiations, including those in respect of the bondholders and the promissory notes, the present Government has never sought, is not seeking and will never seek any write-down in the total quantum of debt Ireland ultimately will owe. He has made that statement in this Chamber and the Minister may even have been sitting beside him at the time. Other Ministers have flatly contradicted that assertion outside this Chamber and have stated that Ireland has negotiated hard for write-downs. The Minister himself signalled a welcome search for a write-down in senior Anglo Irish Bank debt from the New York Stock Exchange. As the person who I imagine to be the key negotiator, can the Minister confirm whether he and Ireland's negotiating team have ever looked for, are looking for or will look for a write-down in the total quantum of debt? I ask because Members have heard directly contradictory views from Cabinet members.

The position always has been absolutely clear, which is that the Government will only act with the full permission of the European authorities and, in particular, with that of the European Central Bank, ECB. The latter has made it absolutely clear on several occasions that there will not be write-downs.

I thank the Minister and call Deputy Michael McGrath.

Can the Minister confirm he was not actively seeking such write-downs? I apologise but this is an extremely important point. That was not the question, as I understand the position of the ECB and the Commission. Directly contradictory claims have been made by members of the Cabinet and this is extraordinarily important. Despite what is the ECB's position or despite what it has told the Minister, has the Minister or Ireland's negotiating team ever challenged that? Has that team ever indicated that although it understands the ECB's position, it still seeks such a write-down and has it ever set out the reason? Everyone is familiar with the reasons and the Minister has stated previously that he would like such a write-down. Everyone understands the moral reasons and no one has argued the case better than did the Minister when in opposition. Has the Minister sought the write-downs, which it was heavily suggested he would do, as the Minister for Finance in waiting?

Deputy, I think we have got it.

The Government has made its position absolutely clear, both in opposition and in government, that it would not act unilaterally and would only act in this respect with the permission of the European Central Bank.

That is not the question. I understand that.

What is the point in asking me what one would do were the European Central Bank to say "No", when the Government already has stated it will not act were it to do so?

How will the Government know unless it asks?

That is not what I asked the Minister. That is not the question.

Deputy Michael McGrath, briefly, as we are running out of time.

The Minister will acknowledge the history of Ireland's bank related debts is a little more nuanced than he set out a few moments ago. As the Minister is aware, shareholders lost approximately €60 billion, depositors were repaid in full - I am sure all Members agree this was the right thing to do - and junior bondholders lost approximately €15 billion. The only people left to take the hit for the losses were either taxpayers or senior bondholders. Since 2008 and right up to the present, the position of the ECB has been that senior bondholders would not contribute a single cent. Consequently, the only people left at the end of the queue or on the hook are the taxpayers. This is what happened as, guarantee or no guarantee, ECB policy ensured this would be the outcome. Since the Minister announced the arrangement regarding the promissory notes, the language of the ECB has been quite hardline. Essentially, it does not care, once it is repaid its money through the Irish Central Bank. Why would the ECB not deal directly with the Irish Bank Resolution Corporation, IBRC, in respect of this bond? Is it because it will not deal with a dead bank? It is accepting a bond, in effect, from Bank of Ireland but will not accept the same bond from IBRC. What was the requirement for coming up with a cumbersome structure involving NAMA and Bank of Ireland? Why not go directly with the bond from the IBRC and receive the money from the ECB?

First, I agree with the Deputy's summary of the various groups that took losses as a result of the collapse of the Irish banking system and it is good to have them put in summary form like that. I refer to the problem of the taxpayer being the last in line and accepting the total burden because the bondholders have the support of the ECB. That is as a result of the deal the previous Government did on the night in question, which was the time to have done a better deal to share the burden.

Does the Minister believe the ECB would have allowed senior bondholders to be burned, even in 2008?

As the records left behind are less than informative, I am not quite sure what happened on the night.

The Minister should publish them.

Burn the papers as well.

It is known that a bad deal was done. On the question of the ECB taking a hard line, I agree it takes an extremely hard line. The Deputy should recall what happened in Greece during the biggest write-off in history, which was comprised entirely of private sector involvement as not a single euro of European Central Bank debt was written off. It refused to get involved in writing off any official debt, even though it was holding a large quantity of Greek bonds. The ECB is very hardline and they are hard people with whom to negotiate. The Government secured an arrangement on this occasion which the ECB did not oppose. However, as for the project on which the Government has now embarked, it undoubtedly will be tough.

Should we take a hard line with the ECB?

Yes, but with whose army?

Why would the ECB not deal with the IBRC?

Simply do not pay them.

That would be an interesting economic concept.

Bring down their banks.

Economic Growth

Willie O'Dea

Question:

9Deputy Willie O’Dea asked the Minister for Finance if he will confirm his latest GDP and GNP forecast for the economy here in 2012; and if he will make a statement on the matter. [19295/12]

The budget day forecasts were for GDP growth of 1.3% this year and GNP growth of 0.7%. These figures were in line with the prevailing consensus at the time. Moreover, it is worth stressing that the Irish Fiscal Advisory Council, in its second assessment report, outlines that the budget day macroeconomic forecasts were appropriate at the time. Since then, forecasts for growth in some of our major trading partners have been revised downwards, while available data suggest that domestic demand - mainly personal consumer spending and investment - may be slightly weaker than assumed.

Having said that, not all of the recent economic indicators have been negative. For instance, the latest data provide tentative indications that the labour market may be stabilising, while purchasing managers indices have been moving in the right direction over recent months. Consequently, there is a lot of uncertainty. Officials in my Department are assessing all the available information with a view to producing revised forecasts at the end of this month. These will be published in the stability programme update, which all member states in the EU are producing as part of the so-called European semester.

This is similar to a question taken earlier. I take it from the Minister's response that the revised forecasts have not yet been finalised. However, he has indicated clearly a number of times that a further downward revision is anticipated. Such a revision took place on budget day last December and another will take place at the end of April. However, the Minister also has indicated it will not affect directly the achievement of the fiscal targets in 2012. Nevertheless, the Minister must be concerned by the analysis carried out by the Irish Fiscal Advisory Council on the impact of nominal GDP being 1% lower, between now and 2015, than the Department's projections to date. Nominal GDP being just 1% lower than what has been forecast is a highly possible scenario. In such circumstances, the debt to GDP ratio would reach 125% and continue to rise rather than moving on to a downward trajectory. The Minister must be concerned, not so much about the short-term impact in 2012 but rather with regard to the impact in later years in the context of realistic growth rates being achieved. He must also be concerned about the impact the latter will have on fiscal consolidation.

I take the advice of the fiscal advisory council very seriously. The council provides very good analysis, which is carefully worked out, and offers prudent advice. I will certainly take cognisance of the advice we receive. We are taking steps to grow the economy. As the Deputy is aware we have a very detailed job-creation plan in place and this is being driven forward strongly through the provision of quarterly reports. We hope that despite the difficult circumstances in our customer countries, we will continue - as was the case last year - to grow the economy. If we could achieve stronger growth rates, these would obviously be of benefit to everybody. We are living in times of great uncertainty. That uncertainty continues to hold sway across Europe. It appears that the United States is emerging from the difficulties in which it found itself but the position in this regard is not absolutely certain. I would not like to make predictions in the first half of this year - over which I could be expected to stand - until matters settle down. One can speculate and be optimistic but there is quite an amount of volatility abroad. It is, therefore, difficult to build a model in respect of the accuracy of which one could vouch as we move towards 2015.

The Minister seems to be basing his outlook on a defiance of gravity. At some point, the revising downward of forecasts for growth - such revisions are pretty much universal at present - has an impact on actual growth. The Minister appears to be stating that despite this and an analysis which he says he takes seriously and which projects a reduction in growth - this will eventually translate into a reduction in growth in our customer countries and in our economy - that growth is actually going to somehow continue here on foot of measures the Government is introducing. However, the fiscal advisory council has stated that this is not going to happen and that regardless of what the Government does growth is going to slow down, both here and in our customer countries. Is there not a sort of blind optimism on the Minister's part in respect of or a refusal to face what is clearly coming down the tracks? I take the point that we cannot solve matters on our own but does this not prompt him and European leaders to question the entire policy that is being pursued?

There is a chasm between the reality that exists and what the Minister is saying. He is dressing up uncertainty as potential growth, etc. Both Ireland and Europe have re-entered recession and exports are being hit. Some 50,000 people in the retail trade here lost their jobs in recent years and 1,800 businesses went bust in the past 12 months. In addition, 76,000 people - nine every hour - emigrated from the State last year. The list of statistics which damn the Government's economic policies is as long as both of one's arms. The Government appears to have a completely unrealistic view of or just simply does not know what is happening among ordinary people in this State. Each year, growth forecasts and tax receipts are revised downwards. It is time the Government began to revise its own policies in the same direction.

The Deputies are constantly mixing up two different policy positions and trains of thought. I am stating that for 2012, the marking downwards of the growth rate will not affect our ability to achieve the 8.6% target in respect of our deficit. On the evidence of the figures for the first quarter and in the context of an assessment of nominal growth in the economy, we will still realise that target. If we revise growth figures downward, it is, of course, a reflection that we estimate that less economic activity will take place here. This has an effect on job creation and is a development about which we are disappointed. However, we intend to address any of the causes of this development which may be internal in nature. In so far as the external causes are concerned, we will do our best in Europe to ensure that more demand-led programmes are put in place. I accept that the latter is not the main trend in Europe at present. We cannot influence the situation in the UK, which is one of our biggest customer countries. The US is having an impact because its economy is beginning to grow-----

Through the provision of a stimulus.

-----and this is sustaining our growth figures at present.

Why then sign a treaty that will prevent us from participating in demand-led initiatives?

If one mixes up all of the economic data into some kind of Boyd Barrett Irish stew, it will make no sense.

The Government is dependent on Keynesian policies.

I wonder whether Deputy Boyd Barrett would be the lamb or the spud in that stew.

Written Answers follow Adjournment.