Rose Conway-Walsh (Mayo, Sinn Fein) | Oireachtas source

I thank Dr. McDonnell for his statement. I agree that how we assess the current economic situation is key to determining the correct policy response in the budget. Dr. McDonnell also stated that demand has been sustained by the winding down of saving, and fiscal stimulus. He went on to talk about how the economic outlook for the next 12 months is mixed, with the global economic environment and monetary policy leading to depressed demand in the Irish economy. That wage growth is negative and there is negative consumer sentiment and stagnant construction and manufacturing. It does not scream of an overheating economy. I want to get to the bottom of this. Could Dr. McDonnell could elaborate on why he so categorically states that the economy is overheating? That seems to be the argument for not spending anything.

Dr. McDonnell argues that the tight labour market shows that the economy is overheating as well. Since Covid, the labour market across the western world has obviously been tight. As far as I am aware, the standard economic view is that the employment level is a lagging indicator. In Dr. McDonnell's view, is the unemployment rate typical of a leading indicator of an economic slowdown or a lagging indicator? What I am trying to get at, I suppose, is the real wage growth we have already referred to. There are a lot of mixed messages from the figures that are coming out and Dr. McDonnell sums it up well when he says: "Overall, there is a clear sense of winners and losers. Net household wealth has reached record levels and corporate profits are healthy but deprivation rates are on the rise." That is often masked by the picture that there are all these savings in households. Dr. McDonnell might speak to that as well in terms of the breakdown of households and where the savings are concentrated.