Dáil Éireann Debate, Tuesday - 19 July 2016
185. Deputy Michael McGrath asked the Minister for Finance his Department’s projection of the impact of a 10%, 15% and 20% fall in the value of sterling against the euro on VAT and excise duty receipts respectively; and if he will make a statement on the matter. [22426/16]
View answerIn the Stability Programme Update, published last April, my Department estimated that, on the basis of the ESRI's HERMES model of the Irish economy, a 5 percentage point depreciation of sterling relative to the euro would increase the general government deficit by around ½ percentage point over the medium term.
The motivation for including this simulation in the Stability Programme Update was the possibility of a 'Brexit'; following the results of the referendum in June there has subsequently been a sharp depreciation of sterling. Revised forecasts for VAT and Excise receipts will be published on Budget day taking into account more up-to-date data, including the prevailing euro-sterling bilateral exchange rate at the time.
