Brian Lenihan Jnr (Dublin West, Fianna Fail)

Yes. In other words, bank customers can smell the breeze as well. Indeed, several weeks before the guarantee was agreed upon by the Government, the chief executives of the two main banks advised me that there was clear evidence of a decline in consumer spending and of excess saving by customers. That pattern had emerged that summer and we saw it in our indirect tax receipts.

Deputy Burton is inclined to speak much of deflation - she raised this during Question Time earlier in the week. It is important to remember that the components of deflation in Ireland are somewhat different from other countries. There are, in fact, three distinct components in it. One is the general deflation that we are seeing worldwide caused by the international recession. One can see, with countries such as the Federal Republic of Germany and the United Kingdom now envisaging declines in the order of -5% or -6%, how close they are coming to the Irish experience.

What brings our deflation figure somewhat higher? There is a budgetary contribution. We did not have any option in beginning the process of bringing the public finances under control and stabilising them. That was not an optional matter for the State. We tried to balance that with the danger of economic decline. Figures were given in the emergency or supplementary budget in April covering that figure and it did not exceed 2% - it was 1.5% or 2%, to the best of my recollection.

There is a third component in Irish deflation which is almost unique to Ireland. It is caused by the depreciation of sterling and the fact that Ireland's trade balance with the United Kingdom is favourable so that as sterling goods are priced down, the price of purchase - the cost of living in Ireland - falls accordingly. That has been very evident. A neat illustration of it is the fact that, for example, the price of clothing in Ireland declined by 14% up to September last whereas the price of food declined but by 6%. Clearly, a substantial amount of the clothing originated in Ireland is traded into the sterling zone before it is sold in Ireland.

I agree with Deputy Burton that NAMA in a sense can have two functions, one of which is that of the fiscal quantitative mechanism or a wall of cash coming into the economy through the banking system lending money on. However, it also operates, in effect, as a funding mechanism to set up a bad bank for the institutions, which I will not mention but which she mentions frequently here in this House irrespective of what section of the Bill is under consideration.

On the question of the shrinking national cake, Deputy Burton is correct. It has shrunk. We must stabilise it.

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