Brian Lenihan Jnr (Dublin West, Fianna Fail)

Most Deputies followed the same ground as Deputy Rabbitte in his first question. The deficit figure will not be postponed to budget day. It will be contained in the four year plan, as will the forecasts for particular years. My Department continues to work on those.

Deputy Rabbitte's second question related to the growth figure being fixed at €15 billion. A number of factors need to be considered in understanding why that additional correction is now needed. First, the overall size of the economy is now smaller, reflecting revisions by the CSO to last year's figures. Second, the level of nominal growth is now anticipated to be lower in the coming years. This affects the fiscal position in two ways. It reduces the ability to generate resources and directly impacts on the debt to GDP ratio. Third, given the outlook for interest costs, servicing the national debt is more expensive, adding to pressure on the public finances.

World growth for this year is now likely to be stronger than was previously expected and this is reflected in the upward revision of real growth for the year. In the last budget, real GDP was forecast to contract by over 1% but is now assumed to be broadly flat, or marginally positive. I gave those figures earlier in reply to Deputy Noonan. The global outlook is, however, more uncertain, with downside risks. In particular, notwithstanding yesterday's very good results, the activity in the United Kingdom economy, a major trading partner, is now forecast to be weaker in the coming years.

All of these factors suggest that the outlook for growth, both real and nominal, is less favourable than a year ago. It means we have to undertake a greater budgetary correction and in so doing there is an additional negative impact on the forecasts. That is why my Department now believes that a central forecast for the period out to 2014 would see average real growth of about 2.75% for the period, with growth being considerably lower than in 2011. Finally, most other commentators have revised downward their view of growth prospects in Ireland.

Deputy Rabbitte then referred to the fact that the cost of NAMA had been ring-fenced outside the national accounts for Stability and Growth Pact purposes. That is correct. This was achieved in regard to the National Asset Management Agency. However, the promissory notes are, in their terms, captured by the Stability and Growth Pact.

With regard to the Franco-German Declaration, I quite agree with Deputy Rabbitte. Were international negotiations to be embarked upon and were the State to commit itself to any fresh treaty relating to these matters, the Government would be anxious to ensure that any such treaty would not entail an amendment to the Constitution. That, of course, would turn on the terms of the treaty itself.

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