Update: Fiscal and Econmic Strategy – Finance 2nd October, 2014

QUESTION NO:  17
DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)
by Deputy Bernard J. Durkan
for ORAL ANSWER on 02/10/2014 

 To ask the Minister for Finance the extent to which he remains satisfied that fiscal and economic strategy to date continues to meet with budgetary and economic requirements and targets in line with best economic practice; if the progress to date indicates continued economic recovery for the future; the degree to which specific issues have been identified as being fundamental to continued economic and social progress; and if he will make a statement on the matter.
 
REPLY.

Following successful implementation of the EU-IMF programme, the Irish economy is emerging from the crisis and there are clears signs that economic recovery is underway. 

First estimates of economic activity for the second quarter of this year were very strong and were well ahead of consensus expectations with GDP growing by 1.5 per cent over the quarter and by 7.7 per cent year-on-year. Taken in conjunction with first quarter data, GDP grew by 5.8 per cent in the first half of this year. The increase in economic activity is broadly-based with both domestic sectors and exporting sectors performing strongly.

Recovery is perhaps most clearly evident in the labour market with employment increasing in each of the last seven quarters representing an increase of over 70,000 jobs since the low-point in mid-2012.  In line with this, the standardised unemployment rate stood at 11.2 per cent in August, having fallen from a peak of 15.1 per cent in 2012. 

Significant progress has been made in addressing the underlying problems of the public finances.  The policy measures implemented by the Government have resulted in a decline in the deficit.  This decline has been gradual and in a phased manner, consistent with the dual needs of supporting economic activity as well as repairing the public finances.  All of the interim deficit ceilings that were set have been met and Ireland is firmly on track to achieve a deficit of below 3 per cent in 2015.  This has been important in restoring Ireland’s credibility.  Thereafter, fiscal policy will be set in line with the requirement to move towards Ireland’s medium-term budgetary objective, which is for a balanced budget in structural terms.  In addition, the debt-to-GDP ratio is estimated to have peaked and is now on a firm downward trajectory.

The Government remains focused on maintaining the reform momentum to achieve the goals of creating more jobs to enhance living standards and ultimately to achieve full employment.  The Government will work to ensure that any obstacles to achieving this are removed.  While the Goverment recognises that further improvements in competitiveness are needed, all the recent data show that we are moving in the right direction.