Professor John McHale:

In terms of tax optimisation, the usual concern is that it might distort GDP, which includes the profits of the multinationals. If they set up their operations and engaged in practices such as the transfer of pricing, they could distort their profits for tax reasons in a way that then distorts GDP. This is one reason for people examining GNP, which subtracts multinationals' profits. As mentioned, GNP grew strongly last year and is projected to grow less than GDP this year. These are some of the issues around Ireland's national accounts.

In terms of GNP, there are issues concerning how account is taken of royalties in the services sector. There is strong export growth in the software sector, boosting GDP and GNP, but this seems to be largely offset by high royalty payments, as the intellectual properties are owned by companies' head offices. Therefore, the royalties show up as high imports, in which instance they probably do not even distort GDP. While these are issues, we have not come across evidence of a significant bias to make us doubt the GNP figures.