Seán Haughey
Ceist:113. Deputy Seán Haughey asked the Minister for Finance if he will report on the stability programme update 2024 he published in April; and if he will make a statement on the matter. [22681/24]
Amharc ar fhreagraTuesday, 21 May 2024
Ceisteanna (113)
Freagraí scríofa
The Stability Programme Update published last month sets out the Government’s macroeconomic and fiscal forecasts. The SPU is a technical document and the projections are prepared on the basis of the policy position set out in Budget 2024, with no new policy measures incorporated.
It is important to highlight that due to new economic governance rules at the European Union level, this is the last time we will be submitting an SPU document. Going forward, Member States will be required to prepare and submit medium-term plans to the European Commission. These plans will commit Member States to an agreed multi-year net expenditure path and will be monitored through Annual Progress Reports. Ireland will publish its first medium term plan in the autumn.
Turning to the forecasts, available evidence suggests the economy is in reasonable shape, at least in aggregate terms. Looking ahead, some of the headwinds that have dominated over the past year are set to ease and this should support a pick-up in economic activity. Crucially, the energy shock is dissipating and the disinflation process is now well advanced, with headline inflation of just over 2 per cent forecast for this year – consistent with price stability. As inflation continues to ease this will boost real wages, real household incomes and in turn consumer spending. Against this backdrop, MDD growth of 1.9 per cent is projected for this year as a whole.
On the public finances, a headline surplus of €8.6 billion is projected for this year, the equivalent of 2.8 per cent of modified national income (GNI*). However, this surplus is heavily reliant on potentially transient ‘windfall’ corporate tax receipts. If these receipts are excluded there would be an underlying deficit in the public finances.
To help mitigate this vulnerability, Government is establishing the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, to invest windfall receipts to help prepare for future structural costs and investment needs. However, the best way to ensure we approach future challenges from the strongest possible position is by continuing to pursue a budgetary policy that is balanced, sensible and sustainable.