Jan O'Sullivan (Limerick East, Labour)
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Question 105: To ask the Minister for Finance his views on the fall in the ESRI consumer confidence index to its lowest level since the index was first introduced and by the 2.1% year on year fall in retail sales, the first fall in retail sales since 2004; the expected effect on VAT returns for 2008 compared to the VAT profiles prepared by his Department in late 2007; and if he will make a statement on the matter. [21963/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am aware of the recent decline in consumer sentiment as measured by the Consumer Sentiment Index, which is prepared by the ESRI in conjunction with a commercial bank. The Consumer Sentiment Index aggregates consumer views on present economic conditions and their perception of prospects over the next 12 months. This year the economic environment has become more challenging. There are a number of international factors which will weigh upon the economic outlook. The downturn in the U.S. economy is of particular concern, as is the appreciation of the euro against both the dollar and sterling. International financial market difficulties also represent a downside risk to the economy. Rising prices for oil, food and some other commodities is dampening real income growth in most of our major trading partners. Domestically, a further decline in new house building is expected this year which will also impact upon our economy.

Against this background retail sales data for first quarter of 2008, as published by the CSO, show a year-on-year inflation-adjusted decrease of -0.2 per cent in retail spending on the corresponding period last year. Excluding car sales, retail sales rose by 2.1 per cent in the first quarter. VAT receipts for the first four months of 2008 were €277 million or 5.4 per cent behind profile.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 106: To ask the Minister for Finance if his Department has revised the forecast rate of unemployment and the growth rate in employment contained in Budget 2008. [21937/08]

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 108: To ask the Minister for Finance if his Department has given consideration to the impact of rising unemployment on the tax take, both in terms of income tax revenue and revenue from spending taxes. [21936/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 106 and 108 together.

On Budget day, my Department projected that unemployment, based on the classification used in the CSO Quarterly National Household Survey, would average 5.6 per cent for this year, a pick-up of 1 per cent compared to the 4.6 per cent average unemployment achieved in 2007. While employment would continue to rise — an increase of 1.1 per cent was forecast — this was expected to be considerably weaker than experienced in recent years. My Department, as always, continues to monitor the emerging labour market position, including developments in terms of the Live Register, which measures on a weekly basis those signing on for social welfare entitlements.

Tax revenues are forecast on a disaggregated individual tax-head basis using relevant macroeconomic drivers and, where appropriate, certain elasticity factors. When preparing the Department's forecasts, changes in employment, earnings and consumption patterns are taken into account. In the tax data published to date, the weakness in revenue is mainly associated with the weaker property market.