Professor Philip Lane:

This is going to be an ongoing issue. In many cases, including those in which we have to report to our colleagues in Europe on the financial system, the regulations will refer to "relative to GDP". My prediction is that in the surrounding commentary they will state that, relative to GDP, the numbers might look okay but because the figures for gross national income and GNI* are far below those for GDP, if we use the alternative indicators, our credit and fiscal position does not look so healthy. This has been an ongoing issue for decades. Gross national income and gross national product are stable at around 20% below GDP. This has been true for a long time. When we make this additional adjustment - I will wait to see what the CSO reports in mid-summer - it will be significantly below that figure again. Therefore, they are big adjustments. When we think about the public debt-to-GDP ratio, it will look a lot higher when we scale it using GNI*, while the stock of household and corporate debt will look a lot worse relative to this indicator. For me, however, it will be more realistic. The paradox, if one likes, is that this big bump in GDP makes the numbers look better. However, when we actually look at what is going on and exclude depreciation and the profits of re-domiciled firms, while more reflective indicators such as GNI* will still show that the economy is performing well - just this morning we saw the unemployment number coming down to 6.6% - it is not doing well to the extent of the headline GDP number. That is crucial and I am glad that the committee is paying attention to the topic and raising the awareness level in the wider Oireachtas. It will be essential in debates because anything we say relative to GDP will look a lot different relative to GNI or GNI*.