Michael McGrath (Cork South Central, Fianna Fail)

The stability programme update published last Friday made for sobering reading, particularly with the reduction in the growth forecast for the current year down by a full per cent to 0.8%. We all accept that growth is the key issue regarding debt sustainability but my question is whether the Department of Finance is still being overly optimistic. While it has reduced significantly the forecast for 2011, it predicts GDP growth of 2.5% for 2012, which is higher than any of the other bodies, including the domestic bodies, the ESRI and the Central Bank. The IMF and the European Commission indicate it will be 1.9% next year; we are basing our figures on 2.5%. For the following three years, 2013, 2014 and 2015, we are factoring in growth of 3% which we all hope we achieve and even out-perform but even on the figures we have factored in, as the Minister has acknowledged, the debt to GDP ratio will be 118% in 2013.

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