Dr. Robert Sweeney:

Regarding the first question on trading partners and the impact that could have, obviously the adjustment path member states will agree with the Commission is based on a debt sustainability analysis the Commission will undertake. One of the criticisms of the debt sustainability analysis was that it does not look at EU-wide or eurozone-wide factors. Let us take one of Ireland's main trading partners, Belgium. I am not sure what Belgium's debt-to-GDP ratio is but I am pretty sure it is over 60%. If it is put on a strict fiscal adjustment path, that will reduce aggregate demand in Belgium. I understand that Ireland's trading with Belgium might not be Belgian consumers but we might just forget that for the moment. That strict fiscal adjustment path is going to reduce aggregate demand in Belgium, or France, to use the French example. That being the case, that is going to reduce exports in Ireland and France's other trading partners, which could reduce output in Ireland and the other trading partners. By reducing output, that in turn could increase debt to GDP in Ireland or whichever trading partner. Therefore, the debt reduction path a trading partner agrees to will definitely have an impact on the member state with which it trades and it could also have significant fiscal implications. One of the criticisms of the EU debt sustainability analysis was that this was not taken into account.

The Deputy's second question was whether, because Ireland is below 60% of GDP, the current suggested fiscal rules will apply to Ireland. One would have to imagine that there would not be as strict monitoring. However, the recent reforms proposed that the European Commission will give guidance - whatever that means - to member states that are currently not in breach. This guidance on how to remain not in breach will be based on the structural deficit.

While it is certainly the case that because we are below 60% we will not be subject to as much monitoring and will not be told how to run our fiscal affairs, it is not the case that the rules will not apply because there will be guidance by the Commission on how to remain within the law, shall we say.