Enda Kenny (Mayo, Fine Gael)

It is not possible to predict accurately the income that will arise over a 12 month period on the basis of several weeks. Deputy Martin is aware that the VAT increase was part of the memorandum of understanding originally drawn up by his Government. This Government brought forward the increase over two years to one year. This gives certainty in that there will be no further increase in VAT. Given the flat indigenous economy, the retail sector has been under serious pressure. I am aware of places throughout the country where smaller units in particular have been hanging on because of a lack of confidence among people to spend. Everyone understands that. Deputy Martin should note that unemployment, while far too high, has stabilised here. No jobs have been lost in the retail sector. Retail sales were higher in January this year than they were last year. I know the pressure that many people are under but let us consider what the Government has done. There has been a stimulus for employers to be able to hold on to employees, a reduction of PRSI and no increase in income tax. There is a recognition that in the budget the Government has tried to stimulate the indigenous economy by way of increasing the opportunity of small businesses to do business. I can testify to some small movements or increases in employment in areas of retail. However, it is realistic to say and everyone understands that in general the retail sector has been under some pressure here.

In the budget the Government brought forward two years of VAT increases in one year. There will be no further increase in VAT. Prices have dropped and have been deflated so there is real value for consumers now. Retail people recognise the challenge ahead and they are up for it and keen to get through it. Prices have come down, competitiveness has increased and value and quality are available for the consumer. However, it is a case of continuously making people understand that this is about creating the opportunity for people who have savings and money to spend it locally. As Deputy Martin is aware and as has been pointed out by many local campaigns, every €100 spent on local retail operations means so much to that local economy.

There will be no further increase in VAT. That is in the memorandum of understanding. The increase has been brought forward for the two years in one go which gives certainty for the future. Prices are down. The employment rate has stabilised. Hotel bookings are up by 6%, an increase in a challenging position. We recognise this but we are focused on giving every stimulus we can to business to be able to do business. The decision made by the Minister for Finance and the Government in respect of VAT brings certainty to the situation, which while challenging will be dealt with.

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