Mr. Seamus Coffey:

On the budget package, the issue we have is how it is achieved and where those increases come from. Is it changing calculations slightly to give an answer that somebody might prefer, or is the space increased through additional revenue-raising measures? In last year's budget, additional space was created through increases in corporation tax, profits linked to intangible assets and a change in the stamp duty rate for commercial properties. They created the additional capacity for more measures to be introduced. In broad terms, if the net answer remains as set out in the summer economic statement, the additional space can be created through that. That was achieved in last year's budget and it is a useful template that shows that the technical calculation of fiscal space is not this straitjacket or limit that has been set out. While we would like to see the plans that were set out in the summer economic statement adhered to, it is not a massive restriction and additional space can be created through revenue-raising measures. By and large, that is what happened last year. We were reasonably favourable to the approach taken in last year's budget.

On Brexit and any financial measures that should be introduced, we do not need to introduce financial measures now, especially from a macroeconomic perspective. Brexit has yet to happen and it is uncertain. We can go through various scenarios that might impact on the public finances. While the fiscal council may call for greater improvement in the budgetary deficit for 2019, and perhaps even a move to a small surplus, there are a number of reasons one does that, one of which is to create fiscal buffers. We have fiscal buffers in order that we can use them, and in order that if we hit a downturn and experience a significant macroeconomic shock because of Brexit that could lead to a reduction in unemployment, an increase in social welfare, an increase in tax revenue, we just let it happen and the economy can then recover. We would run up a deficit but if we have the buffers there, the deficit should not be too large. We will not end up in a situation where we run close to a balanced budget, spend the resources being generated, have a macroeconomic shock with Brexit, along with potential changes in corporation tax or interest rates, and a large deficit opens up. In a situation where we should let things happen naturally and let those deficits stimulate the economy, we do not want to end up in a situation where Brexit happens and there are tax increases and spending cuts on top of it - the pro-cyclical policy of which we have 40 or 45 years of experience. While we might call for greater prudence now, the ability to use it is in the future. If financial measures are required to react to Brexit in a macroeconomic sense, let us wait until it has happened and we will have the space to react appropriately then.