Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

The summer economic statement will be in early July. At that point we will be in a position to provide an indication on how we believe the economy will perform next year. What I will be doing at that point is not just talking about what kind of resources may or may not be available, but I will also be speaking about what I believe will be the right budgetary policy for the economy for next year. We need to be careful, given where the economy stands at the moment, that we do not look at this purely through a rules-based lens. We will say more about that later in the year.

In regard to the observations of the IMF, it is the case, and I acknowledged it in my opening statement, that a portion of the way in which we traditionally manage and measure economic growth is now being significantly affected by contract manufacturing. The degree to which we measure our economy is now affected by how integrated it has become with global supply chains. That is why in the stability programme update, SPU, we have retained the approach of using GNI* and we have now brought in a further measure called modified domestic demand. We are using that as another way of looking at how we believe the economy is performing in a more appropriate manner.

I refer to the corporate tax reference the Deputy made and the SPU. I said in my statement, and on a number of occasions, that the changing environment in regard to corporate tax policy could at a point in the future affect the environment within which Ireland makes decisions. Given that I have been very clear on many occasions that I will not agree to a form of a consolidated tax base and will not change the rate of corporate tax policy, the way in which we have now captured the risk is on page 36, where we make reference to the fact that there are potential concentration risks in regard to where receipts from corporate tax policy are concentrated.

In regard to the Deputy's first question on the MTO, we are working on this with the European Commission and we believe we will deliver the MTO objective for last year. What happened was that the performance of the economy in the third and fourth quarters of the year, and particularly the impact of some of the external factors to which I just referred, have affected the calculation of the output gap. Mr. McCarthy can say something about this later on if the committee wishes him to do so. In terms of any impact this is going to have on policy decisions or resources, it will not have any for this year and the reason for that is that we are delivering the nominal and topline deficit targets that I outlined on budget day.