James Lawless (Kildare North, Fianna Fail)
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68. To ask the Minister for Finance the reason that the stability programme update only makes projections for three years ahead; and if he will make a statement on the matter. [30065/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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My Department published the Stability Programme Update in Mid-April and subsequently submitted it to the European authorities at the end of April. This year, as in all prior years, the format and content of the SPU has been produced in accordance with the guidelines set out by the European authorities. These guidelines stipulate that the macroeconomic and fiscal forecasts should be produced for at least three years ahead. The decision to provide forecasts beyond this time horizon is at the discretion of each member state.

The forecasts produced as part of the Stability Programme Update (SPU) took place against a backdrop of unprecedented uncertainty and geopolitical instability. Given the degree of uncertainty at present, constructing a set of macroeconomic and fiscal projections is particularly challenging and the margins of error around these projections are extremely pronounced. Extending the forecasts beyond the three-year horizon would likely have amplified the uncertainty, as the key assumptions underpinning the forecasts would have become less reliable over time. With this in mind, the SPU does contain a more severe scenario, examining an alternative pathway for the economy in the event of changes to the assumptions underpinning the central scenario.

Faced with many similar challenges, a number of member states throughout Europe have also used a three-year horizon in producing macroeconomic and fiscal forecasts for SPU 2022. As such, Ireland’s forecast horizon is in line with international norms.