Seán Sherlock (Cork East, Labour)
Link to this: Individually | In context | Oireachtas source

191. To ask the Minister for Public Expenditure and Reform if he expects to provide an additional €1 billion capital investment over and above that outlined in the programme for Government, given the outcome of the British referendum to withdraw from the European Union. [20101/16]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Planning for the potential implications of the result of the referendum on the UK's membership of the European Union is challenging as the economic impact of the UK's eventual exit from the EU will very much depend on the outcome of the negotiations between the UK and the EU. The Government has adopted a Contingency Framework, coordinated by the Department of the Taoiseach, to map out the key issues that will be most important to Ireland.

The prudent economic and fiscal polices implemented over recent years have placed Ireland in a better position to deal with shocks arising from the UK exit from the EU. Unemployment has fallen from a peak of over 15% to 7.8%. Gross general government debt that peaked at over 120% of GDP is expected to fall to 88% at the end of this year. Net debt at the end of 2016 is forecast to be 76% of GDP.

The Summer Economic Statement (SES), published last month, set out the Government's medium-term strategy for sustaining economic growth and for the conduct of budgetary policy. The SES set out a macroeconomic assessment of a UK decision to leave the EU outlining a potential adverse impact on the growth outlook.

The SES includes a proposed increase in cumulative capital expenditure of €5.1 billion over the amount of €27 billion in Exchequer capital investment set out in the Public Capital Plan published last September. The Programme for a Partnership Government outlined a cumulative additional increase of €4 billion. The allocation of this additional funding will be determined as part of the mid-term review of the Capital Plan in 2017 and will take account of emerging priorities.

The proposed budgetary strategy for 2017 set out in the SES is not expected to change materially following the result of the UK's referendum on EU membership. The majority of components feeding into the expenditure benchmark calculation for 2017 are included the European Commission's 2016 Spring Economic Forecast and, based on the forecasts in the SES, the 2017 budgetary strategy is consistent with compliance with the balanced budget rule. In addition, there is a broad consensus as evidenced by the discussion at last week's National Economic Dialogue of the requirement for increased public investment to address infrastructural deficits and reinforce the basis for sustainable economic growth over the medium-term.

As noted in the SES, the Department of Finance will prepare a full macro-economic projection in advance of Budget 2017. This will include updated estimates of economic growth taking account of developments up to that time.