Dáil Éireann Debate, Thursday - 5 March 2015
90. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 81 of 12 February 2015, if his reply that the projected structural deficit for 2015 is above the headline deficit indicates that the economy is operating above its trend line, with negative spare capacity; his estimate of the equilibrium level of unemployment, based on the current structural deficit; and if he will make a statement on the matter. [9833/15]
View answerEstimates of the structural budgetary position published in Budget 2015 were produced on the basis of the harmonised methodology for calculating the output gap.
The harmonised methodology suggests a positive output gap in 2015, in other words that the economy is operating above its potential. The harmonised method also suggests an equilibrium unemployment rate of around 10 per cent.
These results are not consistent with other measures of the business cycle in Ireland, and my Department has repeatedly pointed out the shortcomings associated with the harmonised approach. Other Member States have similar issues.
On foot of this, my officials are actively pursuing improvements in the harmonised methodology at EU level.
