Mr. Sebastian Barnes:

On the whole, we endorse the Government's macroeconomic forecasts and the budgetary forecasts as being within a reasonable range. The overall approach the Department of Finance takes is pretty much in line with international practice, subject to the many limitations of forecasting. Ireland has always been quite a difficult economy to predict but if we focus more on domestic issues, perhaps we get a better measure of it. It is also the case that we are in a very challenging environment. There has not been anything like the Covid crisis ever. A lot of the uncertainty relates to the evolution of the pandemic, which is very difficult to predict. It depends on mutations of the virus, how it spreads and many issues that are very hard to understand. We are living in a particularly difficult moment. There are some issues that are not related to this where there could be more progress in the Department of Finance. One area, for example, is on the spending side outside the Exchequer area. Providing more information on that would be very helpful to understand what is going on.

The Deputy's question on inflation, which is very timely, is a good example of the uncertainties we now face. For the last couple of years, inflation has been very low. People thought about why it was so low but they did not think about inflation picking up. We have seen this shock and coming out of it, inflation has picked up a lot. That is partly due to higher energy prices and the factors behind that are fairly complex. It is also to do with supply constraints, both in Ireland and externally, as there has been a shift between different types of activity. Supply has been disrupted by a number of different factors. There are lots of things going on and there is a very active debate as to whether what we see with inflation is a temporary catching up or boost to price levels following the recovery from the pandemic or a more lasting phenomenon, whether the constraints are bigger where there have been shifts in the labour market and whether people's expectations on inflation are going to change. There are many big questions out there. We explore them a little bit in the report but there are no easy answers.

I invite my colleague, Mr. Casey, to share his thoughts on this.