Dáil Éireann Debate, Tuesday - 3 October 2017
122. Deputy Róisín Shortall asked the Minister for Finance the fiscal space that would be available in each of the years 2018 to 2021 over and above the level in the summer economic statement if 2015 potential growth was assumed to be 4.8% or 6.6% rather than 4.3%. [41931/17]
Amharc ar fhreagraAs part of its Spring Economic Forecast earlier this year, the European Commission set the reference rate and convergence margin for 2018.
The reference rates for 2019-2021 are based on my Department’s own estimates of potential growth. The reference rate is based on a ten-year average of potential growth rates. Therefore any change to a single year’s rate results in a one tenth change to the reference rate and to the permitted expenditure growth rate, assuming all other variables remain unchanged.
Thus, using the Deputy’s hypothetical potential growth rates for 2015: 4.8% results in an additional 0.05 percentage points to permitted expenditure growth and 6.6% gives an additional 0.23 percentage points.
To calculate gross fiscal space, the corrected general government expenditure is multiplied by the permitted expenditure growth rate. For 2019-2021, corrected general government expenditure averages €73.3 billion.
As a result, if potential growth in 2015 was 4.8 per cent, there would be circa €35 million additional fiscal space per year and potential growth of 6.6% would result in circa €170 million per year.
