Mr. Seamus Coffey:

The Deputy raised a legitimate concern, in that, if one is making comparisons using a different base, are those comparisons legitimate? GNI* was established in Ireland's case because we wanted to have a growth rate and a measure of the size of the economy that reflected the economy. GDP was not doing that. Previously, we held the view that GNP was sufficient because it stripped out the profits of the multinationals to measure national income, the growth rate of which reflected our ability to service debt. However, GNP has been muddied by some of the activities of multinationals, particularly the onshoring of intellectual property, IP.

It is a legitimate comparison. The GNI* adjustments from GNP summed to approximately €30 billion. In the context of other countries, that is a tiny amount. For example, adding this subtracted income would not affect a €17 trillion or €18 trillion economy like that of the US. It would not even change the ratios of the UK, Germany or France significantly. A comparison of GNI* with the GDP of other countries has some merit. While the net flows in and out of those countries can be large, their measures of GDP and GNP tend to be similar in overall terms. In Ireland, the differences are large in relative terms, given the small size of our economy, the scale of multinationals' operations here and the funds that are flowing through them.

There is merit to GNI*. We have only had one round of estimates provided by the CSO which will conduct further work over the next 12 to 18 months that will give us additional information and provide an insight into the economy. We need to understand what is happening in the economy. We are largely driven by the labour market, that is, counting the number of people working. We would also like to add the value of their output, which GDP was not telling us. GDP was inflated significantly by the impact of the intangibles. GNI* gets us closer to a better measure of those impacts, although we are not there yet. GNI* has been a positive step by the CSO. Its work over the next 12 to 18 months will further improve our ability to assess the state of the economy and compare ourselves with other countries.