Mr. John Palmer:

As I have said, it is almost a negotiation process. We would have to work with them, although I emphasise that this is contingent on the Government choosing that route. The Government must still consider whether it wants to use an independent body or take the endorsement route, and whether it wants the independent body to be the fiscal council. We cannot pre-empt those decisions. The only logical outcome is that we would have to have what is essentially a negotiating process. One would not expect there to be a very precise cut-off point - that is, where the body states that the forecast for the next year is X and anything above that is wrong. One would be looking at whether things were reasonable or endorsable in the range.

If the fiscal council were doing this, its own credibility would be at stake. If its forecasts were widely different from those of all the other independent bodies - particularly the Commission, the IMF and so forth - it would be in a difficult situation. Ultimately, the way the regulation is set up and agreed by the Council is that we must base our budgetary forecasts on independent macroeconomic forecasts - that is, forecasts that are either independently produced or endorsed by an independent body.