Mr. Seamus Coffey:

We do not have an opinion on the type of measure to be introduced. The off-setting measures Deputy Ryan mentioned can be on the tax side - and there are various taxes which could be chosen - or on the spending side. We do not have a particular view on that issue. Professor FitzGerald clearly emphasised that he believes tax increases are the way to go but we have an issue with that.

Private debt has an important role to play and we take account of many economic indicators. In many of our reports we note indicators that might point to overheating, etc. The current issue in terms of credit is not necessarily that it is adding to growth or is growing quite rapidly but rather that it is relatively low. We do not have credit expansion in the household sector.

As we have seen in the most recent figures, we continue to have de-leveraging with households having repaid large amounts of debt in the past ten years. Similarly, we do not have an expansion of credit in the commercial sector. While credit has not increased in the past ten years, if it were to increase, it could act as a further stimulus to the economy.

The Central Bank has been given responsibility for applying additional rules on credit and the credit cycle. We must be cautious, however, about how effective these rules could be, particularly in the case of a small economy such as Ireland into which money can flow from abroad. While the Central Bank may be able to control credit from domestic lending institutions, lending institutions from abroad may not be subject to the rules of the Central Bank, which could result in an increase in lending into the economy. This is a risk to the growth forecast - probably an upside risk - that may lead to problems with the size of output. This is a factor we should not ignore. The report features a series of charts, including on private sector credit. While we keep an eye on this issue, most of our focus is on the fiscal side, which is our primary remit.