Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As the Deputy will be aware, fiscal space estimates are calculated using a set of complex and continually evolving macroeconomic and fiscal projections. These estimates are reviewed and published bi-annually in the Summer Economic Statement in the second quarter and the Budget in October of each year.

Budget 2017, which I presented last month, included, along with the 2017 Budget figures, indicative estimates for the fiscal space for the years 2018 to 2021. These are consistent with the fiscal and economic outlook published with the Budget, which incorporated the impact of near-term uncertainty arising from the UK decision.   This outlook noted that risks are firmly tilted to the downside. Prominent among the risks outlined were a further depreciation of sterling beyond what was considered, and the possibility of a "hard" Brexit.  

At this stage it remains unclear what arrangements will be agreed between the EU and the UK regarding its departure. As you will be aware, a joint ESRI-Department of Finance paper published on Monday sets out the potential macroeconomic and fiscal impacts of the UK's departure under three scenarios and finds that the impact on Ireland's macro-fiscal headline aggregates will be undoubtedly negative over the medium to long-term. By extension, to the extent that growth is weaker than the central Budget scenario, this is likely to have a negative impact on available fiscal space from the time of the UK's departure which now looks likely to be 2019 at the earliest.

Once the timing and exact nature of the UK's departure  arrangements and their likely impacts on the Irish economy and public finances become clearer, the detailed components necessary to update these calculations will also be clearer. However, this will not be for some time yet.  I do not view it as either reasonable or prudent to provide amended estimates of the fiscal space on the basis of each new publication. It is therefore my intention to continue to update the fiscal space estimates twice a year with the summer economic statement and the Budget. 

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