Tuesday, 23 July 2019

Questions (187)

Pearse Doherty

Question:

187. Deputy Pearse Doherty asked the Minister for Finance the projected structural balance as a percentage of GDP and GNI* from 2020 to 2024 based on the scenario A update in the summer economic statement. [32863/19]

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Written answers (Question to Finance)

Given the uncertainty regarding the final form that Brexit will take, the Summer Economic Statement (SES) presented two budgetary scenarios; an “orderly” Brexit scenario (Scenario A) and a “disorderly” Brexit scenario (Scenario B). The Government will decide in September – based on information available at the time - which scenario will form the basis for Budget 2020.

The “orderly” Brexit scenario (Scenario A) is presented in Table 4 of the SES. This scenario includes an increase in current expenditure of 3¼ per cent each year from 2021 onwards. This compares with a 2½ per cent increase assumed in the SPU. An expenditure reserve of up to €0.2 billion, which is being established in 2020 to accommodate funding requirements for the National Broadband Plan and the Children’s Hospital is also included.

The most recently published estimates for the cyclical budgetary component and the structural balance were included in this year’s Stability Programme Update (SPU). Reflecting the expenditure assumptions outlined above and the macroeconomic forecasts presented in the SPU, projections of the structural balance based on Scenario A are provided below:

Scenario A: “Orderly” Brexit

  Year

  Year

  Year

  Year

  Year

as per cent of GDP

2020

2021

2022

2023

2024

Structural Balance*

-0.1

0.0

0.0

-0.1

-0.1

These projections are consistent with the Department of Finance’s preferred GDP-based estimate of the output gap, as presented in the SPU, which provides more intuitive estimates of the cyclical position than the EU Commission’s harmonised methodology, thereby helping to better inform fiscal policymaking. Projections of the structural balance are not available as a share of GNI*.