Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

First, I will give some context about the overall cost of the measures we propose in the Finance Bill. They net out at about €350 million out of a budget of just north of €58 billion. Therefore, what we are discussing here is very marginal in quantum terms, even though it is significant in policy terms. We should keep that in mind. The expenditure side of the budget has a more significant impact, and in terms of public service pay and so on the impact is more on the expenditure side than on anything we are doing here today.

Secondly, regarding the Exchequer figures running towards the last two months of the year, the point I was making when I designed that comment on the October figures was that there was not a big pool of money to be spent on anything because even though the forecasts were running at around €600 million, the revenue flow was around €600 million ahead of forecast. The point being made was that there was not a big pool of money to be spent because all this expenditure was pre-committed. The committee will recall that last June there was a commitment to spend about €500 million extra on health; to spend about €40 million extra on justice; to spend extra money to repair flood damage, particularly on roads, and to put in flood defences and so on; and to restore the summer schools programme, which is the repair programme carried out in schools during the school holidays. All of that amounted to around €750 million. Then there was a commitment to restore the Christmas bonus as well. The point being made was that the Exchequer would need to exceed forecast again in the last two months of the year to ensure that there was sufficient money to cover what was committed beyond the figures in last year's budget. However, my expectation is that there will be sufficient money to do that without increasing the deficit. The point being made was that this was not net additional money available for further expenditure but that it had already been pre-committed.

On Brexit, members are all following the debate. They see what is happening in the United Kingdom and they see that the court case decision has added another complication to the triggering of Article 50 by the British authorities. However, in so far as there is new information here, the committee will recall that in generating the figures on which we based the 2017 budget, we took 0.5% off forecasted growth rates, and consequential buoyancy of taxation was reduced accordingly. This is accounted for in the figures, and we stand over that. That is the way it looks as if it will run out for 2017. The additional information arises from work done by the ESRI and the Department of Finance. They have taken three scenarios of the effect on the Irish economy if, first, an arrangement analogous to what Norway got with the European Union was the end result for the UK. The second scenario is what would happen if an arrangement analogous to Switzerland's were more or less the conclusion of the negotiations with the UK.

The final scenario is what would happen in the event of no resolution and no negotiated settlement, with the UK having to revert to World Trade Organization rules as a most favoured nation. In those three scenarios, different percentages of a reduction in growth and employment in the Irish economy are promulgated.

First of all, this would be ten years after the exit of the UK, so we are looking maybe 12 or 13 years down the line. Second, the base is that these would be the reductions from the position if Britain had retained membership. For the next five years, we expect to grow at approximately 3.5%, which is the sustainable rate of growth in the Irish economy. If one assumes we will grow by north of 3% for the next 12 years, which in present circumstances is a reasonable enough forecasting assumption - although it is very hard to know what will happen as one goes further out on the timeline - it would be 36%. If that is compounded, it goes into the 40% range. In the worst-case scenario, we are talking about a reduction of 3.75% off some figure in the early 40s when one thinks of it as against the baseline. Other figures for the other positions are then built in as well. There are also figures for employment reductions and I assume unemployment increases are also built in.

The other assumption, apart from the baseline, is that Irish authorities would do nothing in response to whatever arrangement would occur between the UK and the European Union. Again, that is a theoretical assumption as an Irish Government or Governments over 12 years, for better or worse, will take action. We assume the actions taken will be beneficial, reducing the damaging effect. For example, if we introduced export guarantees for our vulnerable exporting industries, which is common enough across the OECD, it would mitigate damage that would occur. That is not built into the model.

The third issue raised by Deputy Michael McGrath is the position in the United States. The Taoiseach will be making a statement later in the day and I will leave it to him. It is very early to make any conclusions about what a new Administration in the United States might do. There is a change in the presidency but there is such a change every four or eight years in the United States. The composition of other elements of the US political system also change. I understand that going into the election the Republicans had control of the House of Representatives and the Senate. They have approximately two thirds of the governorships. Apart from the presidency, if one considers the pattern of governance across the United States, the Republicans are the party of government at state and local level. I do not know what will happen any more than the Deputies. I have followed the debate like any professional politician would in a country as powerful and as friendly with Ireland as the United States but I cannot estimate the fallout. There are changes in the presidency but the other elements appear to be where they were before the election.

The Taoiseach will make a statement later in the day and our relationships with the United States have been very strong. I have no doubt they will continue to be very strong but with regard to being precise about possible economic impacts, I cannot help Deputies any further than in what I have said.