Mr. Sebastian Barnes:

As I said earlier, 2015 is a long way away and many things could happen by then. Even if we get to these numbers, it would depend on the circumstances. Picking up on what Professor McHale said earlier, by approximately that time if things work out more or less as expected the extremely tough measures that are being taken now of cutting public spending and things could start to ease off. It would not become a bonanza and we would not quite be back in clover, as the phrase is. It would be when this really tough period would start to stop. At that point we could envisage things such as spending increasing in line with inflation. GDP would probably still be shrinking but we would be out of the very difficult phase. There would be a gradual easing of the conditions.

Under the budgetary rule to which Ireland is committed, the current medium-term objective is for a structural deficit of minus 0.5%. So the country can have a structural deficit which allows it some space. It is not necessary in structural terms to get back to zero. Given that the economy is still likely to be below trend and still suffering the effects of the recession somewhat, including some of the effects of the consolidation, most likely we would still have a cyclical deficit in 2015 but the structural deficit would be somewhat smaller.

The problem is that it is very difficult to know what the structural deficit would be at this point given many of the issues we discuss in the report. This is from where much of the ambiguity comes. If we take the official measures of the structural balance we would be quite a long way away from where we needed to be, but if we take the IMF's measures which seemed to us to be somewhat more plausible, we would be getting there in structural terms. It would not be back to clover but it would be back to easing the extremely tight situation we are in now. It looks like some of the deficit would be cyclical at that point so in structural terms we would be more or less where we needed to be, and as the economy picked up the rest of it would close.