Dr. Eddie Casey:

I will respond to the question on the principles-based approach. We had thought a great deal about this as the fiscal rules were not working well for Ireland. We saw evidence of that during the bust. The fiscal rules allowed growth rates that were far too slow for the Irish economy compared with what might be judged sustainable in terms of growth and spending. In good times they allowed growth rates that were far too fast. The idea was to get to some type of happy medium.

IFAC's principles-based approach is outlined on page 154 of our June report. The key elements and where IFAC differs from the EU fiscal rules are that we take alternative estimates of the cycle, potential output growth for Ireland, and what we think is sustainable growth, and we, along with the Department of Finance, have developed more plausible estimates than the measures that are typically used by the European Commission for countries, which are a standardised approach. We also take a more sensible approach to unemployment linked costs related to the cycle. Much of this is very technical. The idea is to get to a sensible basis on which to judge what is a sustainable pace of growth and spending.