Dan Neville (Limerick West, Fine Gael)
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Question 16: To ask the Minister for Finance if he has revised his forecast for the economy in 2009; and the impact this will have on spending and tax receipts forecast. [45204/08]

Jack Wall (Kildare South, Labour)
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Question 34: To ask the Minister for Finance the forecast for Irish economic growth for 2009 in view of further deterioration in the economy since he forecast a 1% contraction in GNP on budget day 2009; and if he will make a statement on the matter. [45361/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 16 and 34 together.

As I indicated in my response to an earlier question, the Budget forecasts were that the economy would contract by 1 per cent in 2009. Forecasts produced at the time by the ESRI and by the Central Bank set out a similar economic assessment. Reflecting the unprecedented recent economic developments since then, by end-November the consensus of market forecasters was for economic activity to decline in 2009 by around 3 per cent.

At Budget time, I identified that there were significant risks to the economic and fiscal forecasts for 2008 and for 2009. The further deterioration in tax receipts in 2008, as seen by the end-November Exchequer Returns, the continuing weakening of consumer and investor confidence, adverse currency movements, continued difficulty in the international financial markets and depressed economic conditions, are all evidence of those risks materialising. All indications are that economic activity in 2009 will contract by significantly more than the forecast in the recent Budget with an overall contraction of perhaps somewhere in the region of 3 to 4 per cent. The disimprovement in the 2008 revenue take alone would push the 2009 General Government Deficit up by about €1.5 billion to 71⁄4 per cent of GDP. In addition, each 1 per cent disimprovement in economic activity in 2009 beyond the contraction of growth of 1 per cent already forecast would increase the General Government Deficit by about 1⁄2 per cent.

Upon receipt of the end-year fiscal data and the latest economic data, including the third quarter national income data, a revised economic and fiscal assessment will be prepared by my Department in early January and brought forward for Government consideration. This assessment will reflect the dramatically changed environment now being faced. We are living in a time of unprecedented economic difficulties, and the changed circumstances that have occurred in a short period of time must be addressed.