Mr. John McCarthy:

Off the top of my head I do not know where we are in terms of the league table, as it were, but the Deputy is correct that there was a huge collapse in investment. The investment to GDP ratio fell to a level where the acquisition of new capital assets was only just sufficient to cover the depreciation of capital stock, which is more or less unheard of. It fell to 10% or 11% of GDP, which is absolutely unheard of. It is also fair to state that it came after a period of over-investment, producing 90,000 to 92,000 houses. As the Deputy says, it was simply unviable and unsustainable. That must be borne in mind as well.

However, we have bottomed out on the investment side. Over the past 18 months we have seen very strong double digit growth, although I will enter caveat on that in a moment. For example, the data we have for last year shows that in the first three quarters overall investment is up by just under 11% relative to the previous period. However, the caveat I must stress is that this is the law of small numbers. In absolute terms it is not a big increase in investment. It is simply because the base is so low. The improvement in investment that is undoubtedly under way is broad based. It can be seen in the building and construction sector as well as in housing. Again, the law of small numbers applies here. We produced 11,000 units last year. In absolute terms, that is too low, but it is still 30% above the previous year. Other forms of building and construction are very strong. The other component of investment we examine is the so-called machinery and equipment investment, that is, investment in software and so forth. That has been running at 30% for the past 18 months.

I will not say we are back to where we should be. As an advanced economy we would typically allocate between one fifth and one quarter of national income to capital formation or investment. Our numbers are based on investment growth last year of approximately 14%, and 12% this year. That will only bring the investment to GDP ratio back to 17% or 18%. We are still a long way from what one might refer to as equilibrium or the norm.