Mr. Seamus Coffey:

We would accept that assessing overheating is absolutely within our mandate. The Fiscal Responsibility Act provides that we should assess budgetary policy to the extent that it is in line with prudent budgetary and economic management. That is why we developed the heat map, which gives a snapshot of overheating pressures within the economy. At present, we do not identify significant overheating pressures in the Irish economy and the most recent forecasts from the Department of Finance indicate that this relatively benign scenario is predicted to continue. Whether that happens is subject to question. In 2003 and 2004 forecasts at the time would have given a relatively benign scenario as well. When it comes to overheating the one area where we see potential problems emerging is in the housing sector, whether that relates to the level of prices, the rate of price changes or the impact of activity on the overall level of demand in the economy. At present, however, the major growth area has been in non-residential construction but we see a potential for that to change.

We believe we are highlighting overheating and we are pointing to housing as a potential source of it. The Fiscal Advisory Council has been raising overheating in its assessment reports since 2015, just as the recovery was finally beginning to emerge fully in the economy. We are glad that other people are now also taking on board the concerns about what an economy trying to do too much in too short a time can cause. If we are going to have an increase in housing activity it should be sustainable. We should not be going from 15,000 in 2017 to 65,000 or 70,000 by 2020 and then drop down to 20,000 again in 2024 or 2025. That is the roundabout or rollercoaster the Irish economy has been on for 30 years. If housing output is to increase we would like to see it increase in a sustainable manner.