Professor John McHale:

First, to respond to the Deputy's question about downside risks, he is right that our exposure to the global economy is one key source of risk but I would not downplay the domestic risks as well because the dynamics of the balance sheet recession that we are talking about is much more of a domestic story than an international one, but the Deputy is right that our exposure to the international economy makes us very sensitive to what is happening in the global economy. If we were to close ourselves off, it would reduce volatility but it probably would also substantially reduce average growth rates. The successful phases of Irish growth have been the adoption of outward orientated policies starting in 1950s and the good phase of recent Irish growth in the 1990s was again very much due to the success of the export part of the economy. We could insulate ourselves by closing ourselves off but it would probably come with a large price in terms of growth.

In terms of a property bubble, the Deputy is right in saying that it something on which we need to be very focused. Where the fiscal council probably would have most importance is when times are good, not when times are bad. There are many restraints on Government-----