Brian Cowen (Laois-Offaly, Fianna Fail)

As the Deputy states, there are more downside factors coming into the equation on the international economic scene than would have been the case six months ago. The energy issue is certainly one of which people would be much aware. It is against a background of world trade growth, which is still strong when one looks at the emerging economies such as India, China and other Asian economies. The American economy continues to defy some of the odds, despite some downsides in terms of its imbalances, both fiscal and budgetary.

The point we would make is that this situation must be managed. This country is achieving growth rates much higher than our European counterparts. Officially, there is recession in Italy. There are the difficulties of high unemployment in Germany and France. Compared to some of these European economies, one aspect that is different in Ireland is the strong domestic demand and that is a stronger component in our growth than would have been the case previously. It is good that we have that domestic demand. Indeed, the Achilles' heel of the European economy is that they cannot generate any and that is having its effects on them in terms of higher unemployment — double our unemployment rate.

This is an issue which must be managed. The Department does only two forecasts in the year, one in August and one on budget day. If we were doing one every month one would take into account developing data all the time. As I say, we must wait for the final quarter and see what is the final issue.

On corporation tax the trend evident all year has been one of just about meeting the profile. In some cases, it is down.

On exports, we are seeing a reduction in the profile in terms of an increase, from 7% down to 3.9%. These are competitiveness issues of which we must be mindful and we must make sure, in the context of our social partnership talks and our policy responses to some of the higher energy environment issues arising, that we make the right choices. Unless we concentrate on increasing productivity and making sure we maintain our position in the international marketplace, we put at risk the volume of goods and services that we can provide which is the means by which we have generated the activity, created the revenues and created the jobs.

While the macro-economic environment is good in Ireland, there is never any room for complacency. As I stated, the downside factors have increased. The international environment is getting a little more difficult. The European economy certainly needs to take some strategic decisions, structural reforms that would greatly help us given the shape, nature and destination of our exports. It is an issue we must manage and certainly we are conscious of that as we prepare our estimates and budgetary position.

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