Mr. John McCarthy:

The answer in general terms is, to use the cliche, that it has been a year of two halves. In the second half of last year there was a deterioration in the external environment which, unfortunately, gained momentum in the opening part of this year, with the result that we had a very negative first quarter figure. We would not have had this at the time of the stability programme. However, consumption has since picked up. It picked up in the second quarter, when there was a quarter on quarter growth rate of 0.7%. Over the summer the retail sale figures indicated a very strong consumer spend. It appears that if one ignores the first quarter, the underlying position is a little better. Obviously, consumption would have been affected by the change in registration regimes which would have affected car sales in the opening quarter but boosted them mechanically in the third quarter. We have to take into account the fact that the figures for the first quarter were a source of disappointment and, on foot of this, we have revised downwards the overall modest growth rate of 0.25% to -0.25%. It is not a massive change, but I believe we are moving in the right direction in consumption.

With regard to the drivers of consumption, the figure for disposable income is flattening out. The savings rate seems to be coming down. There are modest increases in household wealth, although the literature tends to say the margin of propensity to consume from household wealth is fairly small. Nonetheless, it is moving in the right direction.

The Deputy correctly raised the issue of employment growth. Yes, we have seen very strong employment growth without having the activity to explain it.