Good morning, ladies and gentlemen.
Welcome to the second National Economic Dialogue. I am looking forward to an open and constructive exchange on the challenges and opportunities we face in the context of framing Budget 2017.
The aim of this National Economic Dialogue is to facilitate an inclusive discussion on the competing economic and social priorities facing the Government and our society.
The overarching theme of the Dialogue this year is “Growth towards a Just Society”. We want a just and fair society with more inclusive prosperity and we want to ensure that Ireland’s economic benefits are felt inside every doorstep in every region and community.
To this end our goal is to invest in the economic, regional and social infrastructure required to create the social economy envisaged in our Programme for Government. But a successful economy can only be based on sound public finances and a stable and broad tax base.
I would like to thank Ministers Noonan and Donohoe for organising the event this year. I believe last year’s event played an important role in enabling us agree on the broad parameters for a budget that helped to deliver on our key economic and social priorities.
It is an important part of the revised budgetary process being introduced this year following the formation of the new Government.
This new approach is based on enhanced parliamentary engagement, and I am pleased that the members of the Oireachtas Select Committee on Arrangements for Budgetary Scrutiny are with us today.
Looking around the room, I hope you will agree that we have genuinely sought to make this an open and inclusive process.
UK REFERENDUM
Before offering my view on the country’s broad economic position, I would like to address the outcome of the referendum in the UK.
I have said that I am saddened by the decision last Thursday was in favour of the UK leaving the European Union, both because I am a committed European and because I very much value our special relationship with the United Kingdom.
Along with my colleagues in Government, I had advocated for a different outcome, but, however much I regret it, I fully respect the decision that the people of the UK have made.
In the immediate aftermath, it is important that we recognise that there will be no immediate change to the free flow of people, goods and services between our islands.
It is also important to note that the Government has engaged in detailed contingency planning against this outcome. On Friday, we published a summary of the key actions we will now take to address the contingencies arising from the UK’s decision. Our primary objective remains to protect and advance this country’s interests.
For the purposes of today’s discussions, it is worth recalling also that the Summer Economic Statement, published last week, includes an assessment of the potential economic impact on Ireland of a UK vote to leave the EU.
It shows that the prudent economic and fiscal policies implemented over recent years have placed the State in a stronger position to weather the consequences of the result.
It is not expected that the UK’s decision will have any impact on fiscal space in the upcoming budget for 2017.
Though clearly the outlook for the medium term is now more uncertain, we will continue to implement policies that prioritise economic stability, growth and job creation.Ireland is now a strong, open and competitive economy and with the right decisions in the coming months and years we will stay that way.
THE GOVERNMENT’S APPROACH
This Government’s approach to continued economic and social progress is reflected in the four foundations that underpin the Programme for Partnership Government commitment to a ‘social economy’:
1. Sound public finances and a stable and broad tax base;
2. A supportive environment for enterprise and employment;
3. More investment in economic, regional and social infrastructure; and
4. A just and fair society and a more inclusive prosperity.
These principles underpin the Government’s approach to the management of the economy. Indeed, they are reflected in the theme for the discussions that will take place in the dialogue today and tomorrow.
The Summer Economic Statement published last week outlines the broad parameters that can help underpin the discussions. The Statement is intended to facilitate an open discussion about options and priorities well in advance of the October budget and sets out the Government’s economic and fiscal priorities against a background of a recovering economy.
The policy priority will to be to maintain a steady and stable level of economic growth in the years ahead while dealing with the many challenges we face.
We are also continuing to implement our Action Plan for Jobs which is on track to add 50,000 new jobs to the economy this year.
As a result, there will be over 2 million people at work this year for the first time since the onset of the crisis. Notwithstanding the developments of recent days, we still believe that, if the right policies are pursued, Ireland has the potential to add 200,000 new jobs to the economy by 2020 and reach full employment.
The responsible management of the public finances has set our budgetary position firmly on a sustainable path. We exited the Excessive Deficit Procedure last year. The deficit is now set to be just 0.9 per cent in 2016 and will be eliminated by 2018.
Reflecting this improving balance, the debt to GDP ratio is set to fall to 88 per cent of GDP in 2016 - below the euro area average. As economic recovery progresses the debt improvements will mean that more of our resources can go towards paying for a better services rather than servicing our debt. However, the developments of recent days highlight the fragility of our external environment.
The achievement of the positive growth outlook I have outlined, is contingent upon the implementation of appropriate economic and fiscal policies. The maintenance of competitiveness, in particular, will be crucial in this respect. It is important to bear this in mind in our discussion over the next two days.
Because the gains we have made as a country are hard won and fragile. In charting the course ahead, we must continue to be mindful of the mistakes of the past and the lessons we must learn from them.
If the stronger economy and public finances now allow us to make some choices as a people, the rising international risks remind us thatour choices must be good ones, capable of delivering both a just and fair society and a secure and stable economy.
I will conclude now but let me once again thank you for your participation and I personally look forward to hearing the insightful contributions that come out of this two day event.