Tuesday, 10 June 2014

Questions (192)

Michael McGrath

Question:

192. Deputy Michael McGrath asked the Minister for Finance if he will provide a detailed breakdown for the projected general Government deficit for 2015 increasing from 2.2% in the 2013 Stability Programme Update to 2.9% in the 2014 Stability Programme Update. [24691/14]

View answer

Written answers (Question to Finance)

As the Deputy points out, the deficit forecast for 2015 has changed since the SPU published in April 2013.  Given the significant number of moving parts, changes to the fiscal forecasts are not unusual.  The overall 2015 nominal deficit is some €1.2bn higher than estimated in April 2013.  This higher nominal deficit coupled with lower economic growth has resulted in the forecasted deficit changing from 2.2% of GDP to 2.9% of GDP in the 2014 Stability Programme Update.

While nearly all estimates have changed in the interim, there are three principal reasons for the lower forecast. Firstly, nominal economic growth has not materialised as expected and the forecast nominal GDP for 2015 (which is used as the denominator for deficit purposes) has reduced from €181.6bn to €174.5bn

Secondly, given the latitude provided by the restructuring of the promissory note last year, estimated voted expenditure ceilings have increased by c. €0.5bn.  This was agreed in the context of Budget 2014. Finally, related to the lower than expected economic growth, tax revenue in 2015 is forecast at some €1.2bn lower than this time last year.  There were also some minor positive offsetting factors.