Friday, 6 September 2019

Questions (89)

Michael McGrath

Question:

89. Deputy Michael McGrath asked the Minister for Finance the structural balance under EU fiscal rules according to table 7 of the summer economic statement notwithstanding the concerns over using fiscal space; and if he will make a statement on the matter. [35278/19]

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Written answers (Question to Finance)

Forecasts of the main economic and fiscal variables (including the structural balance) were published in the Stability Programme Update (SPU) 2019 in April. These forecasts are consistent with the baseline budgetary package (i.e. €2.8 billion).

Revised forecasts will be published by my Department in October alongside the Budget. The Summer Economic Statement (SES) 2019 sets out two potential scenarios that will impact on Budget 2020, namely an orderly Brexit or a disorderly Brexit. A further full set of macroeconomic and fiscal forecasts were not produced by my Department in line with its policy of only doing so twice a year, i.e. SPU and Budget.

Table 7 of the SES is a simple illustration of the amount of fiscal space consistent with scenario A. While it attempts to demonstrate the impact on the general government balance of the full utilisation of available fiscal space, this is done in a static manner for illustrative purposes. It is clearly stated that it is not the intention of this Government to use any of this additional fiscal space, rather, the budgetary package outlined in table 6 will be adhered to, should Britain exit the EU under the orderly assumptions. Therefore, any calculations based on the use of this fiscal space are purely hypothetical.

The following table provides an estimate of the structural balance consistent with Table 7 of the SES based on a ceteris paribus assumption that the output gap remains unchanged when the full available fiscal space is used.

 -

2020

2021

2022

2023

2024

Structural Balance based on Table 7 (per cent of GDP)

-0.1

-0.7

-1.1

-1.7

-2.1

Question No. 90 answered with Question No. 88.