Mr. John McCarthy:

It comes back to the point that the fiscal space is set each year in spring. It is pretty much locked down at that time as nine of the ten variables are fixed. If there was to be a major surprise subsequently, it would not really impact because the rule on which we focus most, the expenditure benchmark, is based on the potential rather than actual growth rate of the economy. The rationale for this is that expenditure should grow in line with the trend in the economy, rather than actual developments. It is, if one likes, about avoiding the mistakes we made in the noughties when we allowed expenditure to increase on the basis of temporary growth, in other words, growth in the construction sector and so forth. This benchmark strips out actual growth and does not feed into it because it is calculated on the basis of the trend or the potential growth rate of the economy. It is also smoothed over ten years to remove volatility on a year to year basis. It is these variables, rather than an actual 26% growth rate, that would feed into the relatively complicated formula used to calculate the fiscal space. If one were to have a negative surprise, it would not impact on the fiscal space. I think where the Deputy is coming from - I have some sympathy with his view - is that if GDP were to fall by 26%, everything else being equal, the debt ratio would jump up. This would create a communications challenge and so forth which we would have to try to overcome.

To express a personal view, my concern, at least in the short term, is not that we will see some intellectual property being relocated out of Ireland but that more of this investment may be located in Ireland and we could have another growth shock on the other side. Another 26% increase in GDP would probably be too extreme.