Dr. Alan Barrett:

There was a wide range of questions and I do not know how thoroughly we can answer but we will do our best. The thing to understand about the sorts of estimates the ESRI gave of 2.6%, or whatever, is that it was less than otherwise would have been the case. When we were producing a lot of those estimates or forecasts pre-Covid the vision was that the economy would be going quite strongly, maybe around 4% or 5%, and that the Brexit impacts would impose on that and reduce growth relative to where it otherwise would have been but there would still have been a growing economy. While these things were troubling they were not as troubling as they are now in the context of an economy that clearly is under a lot of pressure from Covid. When Covid is added to the mix there is more uncertainty. Our forecasting last year was driven by the assumption that once the restrictions were lifted there was every chance that while not every business would return to normal, the vast bulk of Irish business and commercial activity could move back to where it was. Therefore there was every hope and expectation there would be a return to strong economic growth once the restrictions were lifted. Every time we brought out a forecast, however, we made the point that the difficulty was that the longer the restrictions lasted, the more and more businesses were simply not going to be able to reopen. There will be a point in the post-restriction phase where the more commercial industrial base that has been eliminated, the more difficult it will be to get the economy back on track. The worry is that lockdown does seem to be extending for very good reasons - I do not want to second guess that - but every day it goes on, more and more businesses probably will not return. We will redo our forecasts later in this quarter to try to get a sense of the likely growth this year. As of December we were reasonably optimistic that things could still return and there would be a relatively vibrant economy which would start growing, the Covid-related deficit would close and there would be scope to deal with a lot of the Brexit challenges, but it is uncertain. Given the thinness of the trade deal it is still very hard to know how these things will evolve over time.

I touched on Northern Ireland and the protocol earlier. There is a unique opportunity for Northern Ireland but if the protocol were to be removed, so too would that opportunity. If there is uncertainty around it, it would be unlikely that the benefits would happen that would otherwise occur. There is something of an historic parallel. Some years ago, there was an expectation that corporation tax in the North would be aligned with the rate in the Republic. It was regarded as a possible advance in the economic fortunes of Northern Ireland but for various reasons, it did not happen. Some of us are worried that there is an opportunity for Northern Ireland to make a significant advance but if there are doubts around the protocol it might fold. I want to emphasise that treating this in a sensible way, there is a constituency for whom there are bigger issues than those purely of economic growth. It is obviously very complicated and the Senator and members of the committee are much better placed to deal with that.