Professor John McHale:

The forecasts we are assessing in the report are the Government’s forecasts on the stability programme update. The forecasts factor in a €2 billion adjustment and based on that adjustment assumption, the projection is that the deficit would be 2.9% of GDP in 2015. It would just meet it. If one were to do less, based on those projections the risk of missing the target would be greater than 50% unless one were to pursue other policies such as perhaps delaying capital spending in 2015 if one thought one would miss the target, but that is not something we would want to do either and that is not the way to allocate public expenditure. Given the strong Exchequer returns to which Deputy O’Donnell referred, based on a €2 billion adjustment, the projection for the deficit in 2015 might now be a bit below 2.9% but probably not that far below it.

Significantly reducing the adjustment below €2 billion substantially increases the risk of not meeting the target or being forced to pursue sub-optimal policies to meet the target, which is not something we would welcome.