Friday, 6 September 2019

Ceisteanna (88, 90)

Michael McGrath

Ceist:

88. Deputy Michael McGrath asked the Minister for Finance the indicative nominal budgetary package in table 6 of the summer economic statement under an orderly Brexit scenario in each of the years 2020 to 2024 if the general Government balance were to be 0% in each of the years in tabular form; the margin of compliance with the expenditure benchmark and the structural balance under the EU fiscal rules; and if he will make a statement on the matter. [35277/19]

Amharc ar fhreagra

Michael McGrath

Ceist:

90. Deputy Michael McGrath asked the Minister for Finance if the nominal GGB figure were added to the indicative nominal budgetary package in table 6 of the summer economic statement then the GGB would be zero for each of the years; if so, the reason this would give a greater budget package in each of the years than the gross fiscal space outlined in table 7 in which deficits in the GGB are forecasted for 2021 to 2024, inclusive; and if he will make a statement on the matter. [35279/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 88 and 90 together.

Simplistically, adding the nominal general government balance (GGB) presented in Table 6 of the Summer Economic Statement 2019 (SES) to the indicative nominal budgetary package would result in the nominal budgetary package increasing by the same amount and the GGB accordingly falling to zero each year, all else being equal.

Assessment of the expenditure benchmark and structural balance is based on European Commission forecasts and, as a result, a direct one-to-one comparison following the above hypothetical reallocation is not possible. This assessment furthermore relies upon numerous variables, including the composition of the new budgetary package and macroeconomic factors.

The difference between the GGB and fiscal space is conceptual in nature. The GGB represents the projected difference between general government revenue and general government expenditure. Fiscal space, which is derived from the expenditure benchmark, represents the legally permitted increase in expenditure and is effectively decoupled from revenue performance.

As the Deputy is aware, this Government is committed to framing the budgetary parameters based on what is appropriate for Ireland and not simply a full and literal application of legally permitted limits. My Department, as well as other commentators such as the Irish Fiscal Advisory Council, have repeatedly highlighted the unsuitability of the harmonised fiscal rules. The Summer Economic Statement included the fiscal space table purely for transparency and completeness.