Dr. Kieran McQuinn:

The Deputy made a valid point about small to medium-sized enterprises and the outlook in future. Something that we have noted even during the pandemic is the varied impact that the pandemic has had on the economy. In general terms, we make the point that the economy has come through the pandemic well and is set to grow strongly next year and the year after. That masks substantial differences beneath the surface. Some sectors of the economy have been completely unaffected. Some have benefited, considering some of the exports last year. Other sectors of the economy have been practically wiped out and have experienced significant difficulties, including the hospitality and tourism sectors. There has been a different effect on different sectors of the economy. This also applies from a regional perspective. Some parts of the country have fared reasonably well and others have been badly affected. There are significant differences in how the pandemic has affected the country and as we hopefully come out of the pandemic, there will be significant differences regarding areas of the economy that will be impacted and other areas that may fare more robustly.

The supply chain is a relevant issue. Interesting work has been done internationally to look at the effect of the supply chain issue on inflation. The Bank for International Settlements looked at the effect of inflation in the eurozone and the USA. It is clear that the supply chain and difficulties associated with it are a significant factor which influences inflation rates in both the eurozone and the USA. Most people would expect that, but it is interesting to see it borne out by the figures and analysis.

The Deputy mentioned building supplies and steel. We have often talked about the housing issue in the institute. Housing is one of the main areas that has been adversely impacted by the pandemic because the demand has remained strong, and was almost bolstered by the increase in savings witnessed over the last year or so. As those savings begin to come back into the economy, much seems to be going into the housing market. The supply side of the market was especially adversely impacted through the restrictions and the building sites being shut down for a period, and through the increase in costs in key areas, including steel and labour. That will have effects that last for a time. As I said in response to an earlier question, the one area where I expect lingering inflationary costs for the economy in the medium term is the housing market, because of the specific nature of the difficulties for the economy at present.

Dr. Doorley might want to talk about the carbon tax again. I am not an environmental economist. My colleagues in the institute make the point about carbon taxes that to impact behaviour, it appears, insofar as there is ever unanimity in economic literature, increasing and levying carbon taxes is an important conclusion from much of the analysis and results, domestically and internationally. That is a fairly unanimous conclusion. It is a cornerstone of the Government's approach to meeting our emissions targets. I do not know if Dr. Doorley or Dr. Farrell want to add to that.