Joan Burton (Dublin West, Labour)
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Question 58: To ask the Tánaiste and Minister for Finance his views on the impact of the decline in the construction sector on the economy; if he is satisfied that the budgetary framework of revenues and expenditures set out by him in Budget 2008 remains viable in view of the changed international financial environment and the revised downward projection of housing construction and GNP growth here for 2008; and if he will make a statement on the matter. [7750/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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At Budget time, my Department estimated that new house completions in 2008 would be around 55,000 units. This is below the level experienced in recent years and will exert a drag on economic growth this year. Activity in other areas of the construction sector, including the National Development Plan, is expected to remain reasonably healthy. Thus, in overall terms, GNP growth of 2.8 per cent for this year was forecast at Budget time. While lower than that seen in recent years this is still a robust rate of growth given the prevailing international conditions.

Of course, as was noted at Budget time, there are risks, both internal and external, to these economic forecasts and my Department will, as always, continue to monitor the situation closely.

It is important to remember that the fundamentals of the Irish economy remain strong and that the economy has responded quickly and effectively to changing economic conditions in the past. Short-term movements in financial markets have limited effects on wider economic trends. Of course, any sustained deterioration in financial market conditions could, potentially, spill over into economic developments.

As regards the projections for tax and expenditure it is still very early in the year and the budgetary forecasts have not been changed. Overall, current spending is budgeted to increase by approximately €4 billion or around 8 per cent, capital spending by approximately €1 billion or around 12 per cent and tax revenues by just over €1.6 billion or 31⁄2 per cent in 2008. The General Government debt level is projected to be around 26 per cent of GDP at end 2008, one of the lowest levels in the euro area.

As with economic developments, my Department monitors tax receipts and expenditure on an ongoing basis and as more data becomes available during the year, any significant changes to the expected Exchequer position in 2008, will be signalled and presented at the end of each quarter.