Professor John FitzGerald:

We were talking about the real economy that produces goods and services for export. Actually, on that, I think we were right. When the IMF came to town in late 2008 and in 2009, it said the economy was broken and would never recover. In particular, it stated that lasting damage would be done to the tradeable sector, that is, the export sector. Were one to plug in the right numbers in terms of the financial sector, the model we had of the economy actually explained what happened to the real economy and we can see the real economy is recovering now. However, what it did not see was the catastrophic damage done by the financial collapse, in which one had a dramatic fall in output. I believed then that the economy would recover from whatever happened and I think that actually is what is happening. Nevertheless, that does not excuse the fact that we did not see the financial collapse. We published an article in 2011 in which we considered how the economy's behaviour was in line with previous behaviour, if one put in the right external numbers into our way of understanding the economy. In an updated medium-term review in 2010, we published a high and low scenario for Ireland out to 2020 on the basis that the real economy was not broken and that the business sector would respond in a recovery. It actually now looks as though the outturn for the decade will be somewhere between our high and low projections from 2010.