Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank the Minister and his departmental officials for their attendance. We have had a limited opportunity to review the draft document and to come up with key questions.

How confident can we be that the Department’s projections in terms of GDP growth of 2.1% this year are going to be accurate? The Minister acknowledged that the outturn for 2013 was quite disappointing with a contraction of 0.3%. This time last year the Department forecast that the economy would grow in 2013 by 1.3% so it was out by approximately 1.6%. For 2014 there is a forecast of 2.1%. How confident can we be this time that the estimate will be accurate? The Minister attributed last year’s poor performance to GDP grounds such as the patent cliff and the sector-specific issues in the pharmaceutical industry but they would have been known at this time last year. I acknowledge GDP is a volatile measure of an economy, employment growth has been positive and further positive growth is forecast in that regard but how confident can we be that this time that the forecast from the Department on the overall measure of the economy will be broadly correct?

Second, there has been considerable speculation that in the next budget in six months time there might be scope for some tax reductions especially for middle income earners. Looking at the figures today in the stability programme update, SPU, even with €2 billion of an adjustment the Department is forecasting that we will come in right on the button of a deficit of 2.9% next year which is the limit of the deficit at which we are allowed to come in. Where stands all of the speculation that has been fuelled by senior Ministers and the Taoiseach that there might be scope in October’s budget to relieve the burden of income tax on families given that the official forecast today shows that even with a full €2 billion adjustment of tax increases and spending cuts we will still only just about come in on the button of 2.9% deficit next year?