Professor John McHale:

Yes, we certainly did. The framework that we have used in considering the appropriate fiscal stance has always balanced the harm that fiscal adjustments do to the domestic economy and to the living standards of households in the economy against the need to ensure the borrowing capacity of the State and that the debt is on a sustainable path. The way we see it, we made significant progress in correcting the public finances and restoring the borrowing capacity of the State. We see borrowing costs now coming down to record low levels. Significant credibility has been built up in the adjustment process so far and much of that has come from following through on the plans with successive Governments doing what they said they were going to do; not just meeting the headline targets in percentage GDP terms but delivering the adjustments that have been promised. That has been significantly behind the progress that has been made.

Thinking about the headline 3% target, it very much depends on the growth of the economy. As you said, Acting Chairman, the economy seems to be performing reasonably well in the early part of this year. Exchequer returns have been encouraging but there is still a lot of uncertainty around growth for this year and also, looking out to 2015, one of the things we know from the international experience on financial crises of the kind we have been through is that growth can be erratic and prone to setbacks. While we do seem to be on an encouraging path at the moment, there are no guarantees that will continue.