Brian Lenihan Jnr (Dublin West, Fianna Fail)

It is difficult to reply to a statement. I have always made it clear that, in hindsight, I would prefer not to have introduced the rate, given what the UK authorities did in their budget, which was a competitive, aggressive VAT reduction. It was criticised in all the other European states at the time. I did not defend the increase. I made it clear to Deputy Burton, however, that I did not believe the increase of 0.5% on a standard rate of VAT that had obtained for many years, apart from a particular period earlier this decade, had a material bearing on the issue about which she was concerned. I stand over that view.

As regards the wider questions about the grave fiscal position the State faces, it is a very serious position. It is worth noting, however, that the Commission predicted our deficit this year would be about 12.5%. It is clear from the returns we have to the end of November, on an actual basis, that the deficit will be less than 12%. That is lower than the United Kingdom's deficit this year. I take it, therefore, that the Deputy will be raising similar concerns with her comrades who have been running the United Kingdom in recent years.

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