Mr. John McCarthy:

I thank the committee for the invitation to discuss the economic outlook. I am a principal officer in the Department. I am accompanied by some of the team whose job includes macroeconomic analysis as well as the production of the Department's macroeconomic forecasts. The presentation we will go through is exactly the same as was given to the Irish Fiscal Advisory Council on two occasions in recent weeks. It sets out the latest economic trends by way of background and includes the Department's forecasts for this year and next year. The Irish Fiscal Advisory Council has a mandate to endorse forecasts for T and T+1 and nothing beyond this is written into the legislation.

The forecasts for next year are based on the purely technical assumptions of consolidation amounting to €3.1 billion being implemented. The reason for this is it is the latest formally articulated Government policy as set out in the stability programme published last April. On this basis we expect output GDP growth of 1.8% for next year in real terms. By way of clarification, I stress it is our position that we cannot comment on the budgetary situation, the budgetary numbers, or what the composition of consolidation is likely to be. We will update the macroeconomic projections when the amount of consolidation is identified and the type and composition of consolidation is identified on budget day. There will be revised forecasts on budget day which may differ from those endorsed by the council.