The Exchequer funding envelope of €91 billion detailed in the National Development Plan (NDP) 2018-2027 is underpinned by a prudent and moderate scenario relating to the economy’s potential growth over the period of the Plan. This ensures that the projected level of public capital investment over the ten years of the Plan is sustainable and affordable in the context of the projected fiscal capacity of the economy over that period.
As set out in section 3.2 of the NDP, the growth projections underpinning the Exchequer capital envelope contained in the Plan are based on GNI*. As the Deputy is aware, the Economic Statistics Review Group has recommended the use of GNI* when measuring the size of the Irish economy.
Macroeconomic projections adopted in the Plan for the period 2018-2021 are detailed in Annex 3 of the Economic and Fiscal Outlook for Budget 2018. As set out in the NDP, a potential or trend growth rate of 2% in volume terms is assumed over the period 2022 to 2027. This potential growth rate aligns with the most recent long-term growth projection from the European Commission for Ireland for the 2020s while being lower than the OECD long-term projection of almost 3% for that period. The prudent approach taken to the macro-economic and public capital investment framework in the plan is confirmed in terms of Ireland’s historic growth performance averaging about 4½% over the whole of the period from 1966 – 2017. The 2% real growth assumption for 2022 to 2027 is supplemented with the conventional assumption that inflation will average 2% in line with the upper limit of the ECB’s inflation target yielding a 4% nominal growth projection over the period.