The Department of Finance has today (30 April 2013) published the Irish Stability Programme – April 2013 Update. Member States of the European Union are required to submit a Stability Programme Update (SPU) to the European Commission in April of every year. The SPU sets out the official macro-economic and fiscal forecasts for Ireland out to 2016 and is the first update of the Government’s macroeconomic and fiscal projections since Budget Day 2013 in December of last year.
The Minister for Finance presented the SPU to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform this evening and the document is set for submission to the European Commission before the end-April deadline
Speaking on the publication of the Stability Programme Update the Minister for Finance Michael Noonan stated:
“The Irish economy returned to growth in 2011 and continued to grow in 2012. My Department expects this expansion to continue into 2013 with GDP forecast to grow by 1.3 per cent this year, with a return to growth in employment and a fall in unemployment. While there has been a modest revision in the headline GDP forecast that was published on Budget day revision incorporates compositional changes to growth. [A Comparison of SPU and Budget 2013 is set out in the notes to editors below].
On the plus side domestic demand has been revised up slightly on the back of recent high-frequency data leading to a slightly more positive revision to employment growth in 2013. However, this is offset by a downward revision in the export growth as the global economy remains weak and the impact of the patent cliff is weighing on pharma exports.
On the fiscal front, the Maastricht returns published last week highlight the progress that we are making in restoring order to the public finances. An underlying deficit of 7.6 per cent of GDP was recorded for 2012, well within the EDP target of 8.6 per cent. An underlying deficit of 7.4 per cent is forecast for 2013, inside the EDP target of 7.5 per cent. My Department remains confident that the fiscal strategy to reduce the Budget deficit to below 3 per cent by 2015 is on target.
Overall, it is clear from today’s figures that we are making progress in restoring order to the public finances and returning the economy to growth. However, the real challenge remains getting people back to work across the country and the Government will continue to prioritise measures that are pro-jobs and support the recovery in the domestic economy.”
Notes for editors
As part of the European Semester, each Member State submits a Stability Programme Update (SPU) to the European Commission in April of every year. This process is legally separate from the reviews of the financial assistance programme by the European Commission as part of the EU-IMF financial assistance programme for Ireland.
The stability programme updates the Budget 2013 Economic and Fiscal Outlook. SPUs from previous years are archived at http://ec.europa.eu/economy_finance/economic_governance/sgp/convergence/index_en.htm
An explanatory video on this year’s SPU has been prepared by the Department and is available at http://www.youtube.com/watch?v=To-GzMu_FvI
The next set of fiscal and budgetary forecasts is scheduled for Budget time, likely, in mid-October, and will take into account Budget measures which will be the subject of Government decisions in the meantime.
Table 1: Comparison of SPU and Budget 2013
|SPU 2013 (April 13)||Budget 2013 (Dec 12)|
|GDP (% change)||1.3||2.4||2.8||2.7||1.5||2.5||2.9|
|Underlying GGB *||-7.4||-4.3||-2.2||-1.7||-7.5||-5.1||-2.9|
|GG Debt to GDP ratio||123||119||116||111||121||120||117|
These forecasts make the technical assumption that the promissory note savings are allocated to deficit reduction from 2014 onwards