Michael McGrath (Cork South Central, Fianna Fail)
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118. To ask the Minister for Finance his estimate of the current structural deficit; and if he will make a statement on the matter. [32467/14]

Michael Noonan (Limerick City, Fine Gael)
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My Department's latest estimates of the structural deficit were outlined in the April 2014 Stability Programme Update.

The structural deficit is the underlying deficit that would occur in the absence of temporary factors and the impact of the economic cycle on the budget balance. The estimated structural budget deficit in 2013 was 6.2 per cent of GDP, which was projected to fall to 4.7 per cent in 2014. The 2014 estimate comprised the headline general government deficit of -4.8 per cent of GDP, less temporary measures amounting to 0.2 per cent of GDP. To arrive at the structural balance from this, the component of the deficit which related to the position on the economic cycle - the cyclical component - was removed. This component amounts to 0.3 per cent of GDP. This cyclical budgetary component is derived as a function of the output gap. These estimates are based on the harmonised European approach which combines budget semi-elasticities (the responsiveness of the budget balance to changes in the output gap) with the estimated output gap.

Estimates of both the headline fiscal aggregates and the output gap are sensitive to data revisions. This is particularly so in the case of Ireland.  The next set of projections will incorporate the impact of the ESA 2010 statistical changes which are currently being implemented across all European Member States.