merrion street

Today’s figures are very welcome and highlight the strength of the recovery in the Irish economy that is well underway. The upward revision to the level of GDP last year, in line with technical changes being implemented in all EU Member States, has a favourable impact on both our deficit and debt ratios. My Department projected a deficit of 4.8 per cent of GDP for this year in the Stability Programme last April on the basis of GDP estimates available at the time; if everything else was to remain unchanged, the carry-over from the higher level of GDP would mean the deficit would be closer to 4.5 per cent of GDP. Indeed, if tax revenue continues to perform as it has done in the first half of the year, the outturn could be even better.

In relation to the debt ratio, the Stability Programme estimated a debt-to-GDP ratio of just under 124 per cent at the end of last year; today’s figures mean that this is now closer to 116 per cent of GDP, and the downward trend in the debt ratio is now firmly established.

Growth figures for the first quarter are also encouraging, with GDP increasing at an annual rate of 4.1 per cent, the strongest growth rate since 2011. As had been anticipated, domestic demand made a positive contribution, which is welcome as this is both tax- and employment-rich. High frequency data for the second quarter (retail sales, industrial production, etc.) suggest a continuation of recovery, and this is evident from the fall in the number on the Live Register published yesterday. So it is clear that the difficult but necessary decisions taken over the past number of years have provided a strong and stable foundation for recovery, growth and job creation.