Professor Michael McMahon:

It is a very difficult question to answer but the point I would stress is the role the European Central Bank and other authorities are playing in providing support for the bond market. Nominal yields are at all-time lows in many countries, and as Mr. Barnes outlined, even in the scenarios that look much weaker than they did at the time of the previous budget, the interest payments, at least for now, are projected to fall over that period.

The Deputy rightly asked whether there is a trigger value whereby, at 120% or 130%, all of this will change. We just do not know that. Much will depend on the ongoing levels of support that come from the European Central Bank and the European Commission. We believe that the appropriate response is to provide the support now in phase 1 and equally to provide some stimulus in phase 2, but by phase 3 and beyond, there will be a need to bring the debt dynamics back to a more sustainable path. The good thing-----