Summer Economic Statement

Dáil Éireann Debate, Tuesday - 12 July 2022

Tuesday, 12 July 2022

Questions (317, 318)

Pearse Doherty

Question:

317. Deputy Pearse Doherty asked the Minister for Finance the projected GDP, GNI and deficit ranges for 2022 and 2023 as outlined in the Summer Economic Statement in nominal terms. [37245/22]

Pearse Doherty

Question:

318. Deputy Pearse Doherty asked the Minister for Finance the projected levels of inflation as per the Consumer Price Index underpinning the Summer Economic Statement. [37246/22]

Written answers

Minister for Finance

I propose to take Questions Nos. 317 and 318 together.

My Department produces two sets of macroeconomic and fiscal projections each year, both aligned with the European budgetary cycle.

Forecasts have not been updated since the spring forecasts, as set out in the Stability Programme Update (SPU).

That said, the Summer Economic Statement (SES) indicated that momentum in the domestic economy is slowing and it is fair to say that the risks to the Modified Domestic Demand projections for this year and next are tilted to the down side.

On the inflation front, clearly the incoming data has been higher than anticipated and I indicated at the press conference that we would see inflation averaging somewhere in the region 7-8 per cent for this year. On the basis of current energy prices, we would expect to be revising upwards somewhat our inflation projection for next year.

In terms of the fiscal projection, to compile the numbers set out in the SES, my officials took into account two factors that have changed since the SPU, namely the much stronger-than-expected tax receipts and the revised budgetary parameters (€6.7 billion versus €4.5 billion). On this basis, an indicative range as a share of GDP was provided. In nominal terms, mid-point of these ranges are the equivalent of surpluses of around €1¼ billion for this year and €2½ billion for next year. My officials also indicated that if corporation tax had remained at 2019 levels, ceteris paribus these figures would correspond to deficits of around €7 billion this year and over €6 billion next year.

Question No. 318 answered with Question No. 317.

Question No. 319 answered with Question No. 306.