Stability Programme, 2018 Update John McCarthy Department of Finance 17 th April 2018
Stability Programme – context Legal requirement: - set out in Stability and Growth Pact : reg. 1466/97 - all MS submit final SPUs by end-April : Commission and Council - legislation also requires independent endorsement of economic forecasts : IFAC endorsed Process: - draft SPU published (17 th April) : ‘European Semester’ - Minister for Finance presents to Budget Oversight Committee (18 th April) - final version submitted (30 th April) : laid before Dáil Éireann Summer Economic Statement: - published in June / July 2
Short- term economic prospects remain generally favourable… 9.0 GDP annual growth rate (per cent change) 8.0 forecasts 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2017 2018 2019 2020 2021 3
Employment set to return to pre- crisis peak this year… 2,500 for every 10 jobs lost during the forecasts crisis, 9 have now been replaced 2,400 pre-crisis peak 2,300 2,200 forecasts 2,100 2,000 1,900 1,800 1,700 1,600 1,500 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 4
General government balance = unchanged from autumn forecasts… 2.0 0.0 -2.0 forecasts per cent of GDP -4.0 -6.0 -8.0 -10.0 -12.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 5
Public debt remains elevated… 180 debt-GDP debt-GNI* 160 forecasts 140 forecasts 120 per cent of GDP 100 80 60 40 20 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 6
Risks tilted to the downside… • Short-term - Brexit : Irish economy exposed : already seeing some impact - external demand (UK economy slowing) - appreciation of euro / sterling - disruption to world trade - geopolitical • Medium-term risks - Brexit - corporation tax landscape 7
Summary: macroeconomic and fiscal forecasts, April 2018 year-on-year per cent change (unless stated) 2017 2018 2019 2020 2021 GDP 7.8 5.6 4.0 3.4 2.8 GNP 6.6 5.6 3.7 3.1 2.6 Inflation (HICP) 0.3 0.8 1.0 1.4 2.6 Employment 2.9 2.7 2.3 1.9 1.7 Unemployment (rate) 6.7 5.8 5.3 5.3 5.4 GG balance (per cent of GDP) -0.3 -0.2 -0.1 0.3 0.4 GG debt (per cent of GDP) 68.0 66.0 63.5 60.2 58.7 GG debt (per cent of GNI*) 100.1 96.9 93.7 88.9 86.8 8
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