Brian Lenihan Jnr (Dublin West, Fianna Fail)

As the Deputy is aware, in recent weeks the Government has restated its commitment to achieving a general Government deficit of 3% of GDP by 2014. More recently, it has concluded that a total consolidation of €15 billion is necessary over the next four years in order to achieve the target. A significant front-loading of this adjustment has also been signalled and a consolidation package of €6 billion has been decided upon for 2011. In his recent visit, Commissioner Rehn noted that our assessment was appropriate and agreed that significant front-loading was required.

The four-year budgetary plan, which is being prepared, will be published later this month and will set out the budgetary and economic strategy for the period out to 2014. It will provide details of how the adjustment is to be made each year so that we achieve a general government deficit of 3% of GDP by the end of 2014. A crucial part of the plan will be enhancing Ireland's growth potential and making the necessary structural reforms will be key in this regard.

Last week, my Department published a technical information note on the economic and budgetary outlook in advance of the publication of the four-year budgetary plan. That note outlined the emerging economic and budgetary outlook in order to enhance transparency and inform the public ahead of the publication of the four-year plan later this month.

The note detailed the emerging economic and budgetary position for 2010 and provides an assessment of the economic and budgetary outlook for 2011 and for the medium term. The position was based on assumptions regarding the impact of a consolidation package of €15 billion over the next four years.

As I indicated, the Government has decided upon a consolidation package of €6 billion for next year. On a technical basis, the information note projected that this would result in a general government deficit in the range of 9.25% to 9.5% of GDP next year. The information note also provided an estimate of the deficits in later years, on the basis of the remainder of the total multi-annual package of €15 billion being indicatively assigned to each of the years. While decisions have yet to be announced regarding the breakdown of consolidation between expenditure and revenue, for the purposes of producing economic forecasts it was assumed that the bulk of the adjustment will take place on the expenditure side in 2011 with a ratio of expenditure to revenue measures weighted 2:1 applying over the course of the 2012 to 2014 period.

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