Arthur Morgan (Louth, Sinn Fein)
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Question 129: To ask the Minister for Finance his views on the ICTU economic outlook for 2008, in particular its assertion that the cost of living will continue to rise in 2008; and his views on whether this will have an impact on the current round of pay talks. [16607/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am aware of the Economic Outlook publication prepared by the Irish Congress of Trade Unions. This set out their analysis of the Irish economy as the national pay talks got underway. I acknowledge that there has been a recent increase in the rate of consumer price inflation but this is primarily due to external factors. At a recent plenary session of the social partnership pay talks, my Department gave an update as to economic and fiscal developments. At the time it was pointed out that the current market consensus is that inflation, as measured by the CPI, will average 4 per cent this year and moderate to an average of 2.5 per cent in 2009. Any new agreement will have to take account of the economic and budgetary realities and the need to improve our competitive position.

Finally, from a competitiveness perspective, I would stress the importance of ensuring that the externally-driven price increases that we are currently experiencing are not exacerbated by internally-generated second-round effects. Securing a sensible and sustainable outcome to the current round of pay talks will have an important role to play in this respect.