Skip to main content
Normal View

Budget Targets

Dáil Éireann Debate, Thursday - 26 June 2014

Thursday, 26 June 2014

Questions (75)

Michael McGrath

Question:

75. Deputy Michael McGrath asked the Minister for Finance the deficit that would be achieved in 2015 based on current information if a budget adjustment of €1 billion took place; and if he will make a statement on the matter. [27787/14]

View answer

Written answers

The most up-to-date budgetary estimates, published in the SPU in April, are based on the assumption of a consolidation package of €2.0bn in 2015 which is designed to deliver a deficit of 2.9 per cent of GDP in 2015. This is within the excessive deficit procedure (EDP) ceiling of 3.0 per cent.  The macro-economic forecasts underpinning the SPU have been endorsed by the Irish Fiscal Advisory Council.

On the basis of SPU assumptions, reducing this figure to €1bn would, as a first-round effect, add about 0.6 percentage points to the forecast deficit in 2015. However, a lower quantum of consolidation would likely weigh less on economic activity and see higher revenue growth, which would ameliorate the increase in the deficit to a certain extent. It should be noted that the exact impact on revenue and the deficit is difficult to estimate given the significant number of dependent factors, most significantly, assumptions around the composition of adjustment.

Overall, given the number of moving parts and only five months of revenue and expenditure data to hand, it is too early to speculate on what the starting position for the Budget will be.  The next formal forecast will be the White Paper on Receipts and Expenditures which will be published in advance of the Budget and will set out the no-policy-change position for 2015. In general, fiscal policy has to continue the process of necessary fiscal consolidation while, at the same time, supporting economic growth and job creation.  Achieving an optimal balance between these goals is essential for maintaining and bolstering Ireland's hard-won market confidence.

Top
Share