Professor John McHale:

I refer to the €2 billion planned for this year and the €3.1 billion the Deputy mentioned for last year. As for the €2 billion adjustment for this year, the Deputy mentioned the European Commission, which actually believes we will need adjustments of €2.6 billion in the coming budget to meet the 2.9% target and that largely reflects a more pessimistic assumption about growth. Even though the fiscal correction has evolved according to plan and there are tentative signs that the economy is recovering, this again merely underlines the uncertainty that still remains. As for the yields on Irish bonds, the Deputy is absolutely right and yields have fallen since budget 2014. It does not appear as though reducing the size of the adjustment from €3.1 billion to €2.5 billion has done any significant damage. However, one must realise there are many factors affecting bond yields, which include international factors such as the quantitative easing programmes undertaken by different central banks, including those of the United Kingdom and the United States. In addition, developments at eurozone level have strengthened confidence that support would be there at a European level, which makes it less likely that countries could end up defaulting and therefore, investors are not demanding such large risk premia.