Catherine Byrne (Dublin South Central, Fine Gael)
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Question 26: To ask the Tánaiste and Minister for Finance his views on the concerns expressed by the OECD regarding the deterioration in the public finances. [15653/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The OECD report contained a generally positive assessment of the Irish economy. While recognising the challenges facing Ireland in the period ahead, the report acknowledges the remarkable performance of the Irish economy over the past decade. Of particular note is that the OECD report states that the economic fundamentals — including a skilled workforce, a flexible labour market, moderate taxation, a business-friendly regulatory environment and a sound fiscal position — all remain strong. In addition, the OECD's assessment of Irish fiscal plans is that they remain prudent overall. In commenting on the fiscal position, the OECD notes that the rate of public spending needs to slow and that it is important not to lock-in expensive spending commitments. I have already indicated on a number of occasions that spending growth has to moderate and grow in line with the growth of our resources over the medium term. Consequently, I regard the OECD's assessment as an appropriate one in the present economic climate.

Terence Flanagan (Dublin North East, Fine Gael)
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Question 27: To ask the Tánaiste and Minister for Finance if he has had reason to modify his economic or public finance projections for 2008; and if he will make a statement on the matter. [15688/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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At Budget time, an economic growth rate of 3.0 per cent in GDP terms was forecast. However, a number of risks to the economic forecasts were identified, including the possibility of a sharper slowdown in the US, the possibility of adverse exchange rate movements, the possibility that financial market difficulties could persist for longer than assumed and the possibility of a sharper contraction in new house building. It now appears that some of these risks have materialised and in this regard other economic commentators that produce forecasts on a more frequent basis have revised their forecasts for growth in 2008 downwards. The market consensus is now for GDP growth of around 2.25% this year, compared to a consensus of about 3.25% at Budget time. More modest growth would, of course, have implications for the evolution of the public finances.

At end-March, there was a tax shortfall of €600 million and I indicated that I did notexpect that it would be recouped. While the fiscal position has weakened somewhat from that envisaged at Budget time, it is important to point out that the current situation is manageable given the strong position of the public finances such as our low debt to GDP ratio. Also, the fundamentals of the Irish economy remain strong. This will help us to absorb the housing adjustment and external 'shocks' so that our medium term prospects are favourable. For instance:

our public finances are sound with one of the lowest levels of debt in the euro area;

our markets are flexible allowing us to respond efficiently to adverse developments;

we have a dynamic and well educated labour force;

we have a pro-business outward looking society;

the tax burden on both labour and capital is low.