Mr. Seamus Coffey:

If you were to deviate from it, the European Commission could get the Council to pass a Council decision requiring a country to introduce measures to get back on the path set out in its medium-term plan. That would be a very significant step. While the possibility of doing that exists, it seems like it would be done only in the cases of countries exceeding either the debt limits or deficit limits.

In the case of Ireland, because they are done on the basis of GDP, it would almost take an extreme scenario for Ireland to breach either. If you consider the 3% deficit, as our current GDP is over €500 billion, it would be a deficit of €15 billion. That just gets us to the 3% limit. For the Commission to look at this seriously, one would have to go above that. Last year Italy had a budget deficit of around 7% of GDP. That rightfully attracts attention. Although it does look likely to fall in 2024 it will still remain above the 3% limit. The revised fiscal framework is about addressing those sorts of scenarios.

From an Irish perspective, we have our own problems. They are somewhat different and maybe do not fall under the remit of the revised rules. The first is our reliance on corporation tax that really would not be taken into account at all. Number two would be the nature of our GDP, which is well recognised does not reflect the sort of the debt-carrying capacity of the economy. Third would be the very strong economic position we find ourselves in. We are unlikely to get enforcement from the European Commission, which looks at Ireland as being in compliance legally with this framework. That means it puts much more emphasis perhaps on a domestic surveillance, from the point of view of the Irish Fiscal Advisory Council, and also perhaps on policy from the point of view the Government and the Oireachtas. So, one would like to think that something could be done but our reading of it at this stage is that as long as we stay below the 60% debt and 3% deficit thresholds then we are unlikely to face that type of enforcement where we would face a Council decision that could tell us to introduce additional measures to get back on a medium-term next spending plan as set out in a five year plan. In the current environment it is unlikely that a country like Ireland would find itself in that position.