Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

Question 101: To ask the Tánaiste and Minister for Finance the implications for this year end Exchequer deficit, general Government balance deficit and possible breach of EU Stability and Growth Pact deficit limits and the way he proposes to address this in view of tax revenue shortfall of €600 million up to March 2008 and house completion projections for 2008 being substantially lower than 55,000 projected in his budget forecast for 2008; and if he will make a statement on the matter. [15910/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The fiscal position at end-March was some EUR600 million behind where we had expected. Furthermore, I have indicated that at this stage it is not expected that this tax shortfall, particularly in CGT, will be recouped later in the year. In terms of new house completions, the indications are now suggesting that housing output may be below that anticipated at Budget time. Some of this weakness is evidenced in the performance of taxes in the first quarter.

While our fiscal position may have weakened 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.

I wish to stress that the Government accepts that there can be no unnecessary loosening of fiscal policy and, in that context, the implementation of the National Development Plan remains a key priority. As regards current day-to-day expenditure, it is crucial that the agreed budget spending limits are adhered to this year. As I indicated at Budget time, the rate of increase in current spending over the medium term must be managed carefully and kept within available resources. This Government intends to do just that. Ireland is compliant with the Stability and Growth Pact requirements and the Government is committed to respecting the terms of the Pact as the economy adjusts to a period of slower growth.