Dr. Claire Keane:

One thing that struck me when talking about this was that we are in a period where forecasts and the current inflation rate, such as the most recent one of a few months ago, are very divergent. Again, there would be nothing to stop one from using a forecast in a particular year. If, say, in a worst-case scenario, one overshoots - for example, if forecast inflation is 6% and one gives the 6% rise - but it turns out that inflation only grows by 4%, then one could reduce the rise the following year, so that the system does not get out of kilter.

Again, the whole issue of benchmarks is important. We are not saying that the social welfare and tax system is perfect as it is. However, given the estimate we did in 2020 that indexation would cost between 10% to 29% of the fiscal space, that still leaves a lot of fiscal space available to target measures at discretionary policy.