Shane McEntee
Question:60 Mr. McEntee asked the Minister for Finance the underlying assumptions which he has made regarding the impact on consumption and on saving of the maturing of SSIAs. [38845/05]
View answerTuesday, 13 December 2005
Questions (27)
Written answers
Domestic demand, including personal consumption, has been the main driver of economic growth in 2005. In preparing the budget 2006 forecasts, my Department assumed that personal consumption will continue to be a major driver of growth over the forecast period 2006-08, supported by strong earnings and employment growth and overall low interest rates. The maturing of the SSIA accounts is expected to provide some impetus to consumption, particularly in 2007, when the bulk of the proceeds become available.
While it is difficult to be certain of the impact of SSIA maturity, economic theory and the experience of other countries suggests that it is unlikely that a once-off factor of this nature will have an undue impact on overall consumption patterns. In 2006 growth in personal consumption is forecast to be 5.8%, accelerating to 6.8% in 2007. A slightly lower growth rate of 4.6% is expected in 2008 as the effect of the SSIA scheme unwinds.