Mr. John McCarthy:

I thank the joint committee for the invitation to discuss with it the economic outlook in advance of the budget. As the Chairman mentioned, I am the chief economist in the Department. I am accompanied by colleagues on the forecasting team. They are Ms Laura Weymes who looks after the labour market side; Mr. Shane Enright who looks after the domestic side, and Ms Mary Dalton who monitors international trends and inflation.

By way of background, for the information of the committee, Regulation 473 of May 2013, one of the two pieces of legislation known as the "two-pack", introduced a common budgetary timeline. Specifically, it requires all non-programme euro area member states to submit draft budgetary plans to the European Commission and the Eurogroup by 15 October each year. It further specifies that the economic forecasts on which the draft budgetary plan is based should be either produced by an institution independent of the Government or by a finance ministry and endorsed by an independent body. In Ireland, as in the majority of euro area member states, we have gone down the endorsement route and the endorsement function has been assigned to the Irish Fiscal Advisory Council, IFAC. In order to make the process operational, a memorandum of understanding between the Department and the IFAC has been signed. This is available on the websites of both institutions.

In the context of budget 2015, the endorsement process has been under way since mid-September. In the past few weeks my colleagues and I have been engaged in in-depth discussions with both the secretariat of the council and council members on the latest economic trends and the likely outlook. I can report that the council has concluded that the Department's forecasts are within the endorsable range. In other words, they have endorsed the forecasts as of today and a letter of endorsement will be placed on the websites of both institutions this afternoon.

We have provided the committee with a copy of the presentation provided for the council last week as part of the endorsement process. It is a fairly large document, It comprises 50 slides and is technical in places. I propose to present a more concise version to the committee. Of course, we will take questions on both presentations. We circulated the first presentation yesterday and the more concise version today.

I stress that the numbers we are presenting to the committee are based on the technical assumption that there will be no policy change. This is purely a technical assumption that was needed in order that both the Department and the council could agree on an appropriate macroeconomic forecast.

It does not represent Government policy. In fact, the forecasts that will be presented on budget day may change from the numbers we present today to take into account any budgetary measures. As the Minister has outlined in his letter to the clerk of the joint committee, we are not in a position to discuss the fiscal situation nor the implications of the economic numbers for policy. We did not discuss these with IFAC and we have no mandate to do that.

To kick off, I propose that the team quickly run through the presentation, which comprises 14 or 15 slides. Ms Mary Dalton will start the presentation, outlining the latest international developments, and will say something about the inflation outlook. Mr. Shane Enright will present on the domestic situation and Ms Laura Weymes will discuss the labour market outlook. I will then summarise what all this means for the outlook and talk about the actual forecast and what it means for this year and next. We will happily take questions thereafter.