Minister Donohoe publishes the Stability Programme Update 2019
Employment to continue to grow, general government surplus recorded for first time since 2007 but growth rates revised downward as external risks remain
- GDP is projected to increase by 3.9 per cent this year and by 3.3 per cent next year. These forecasts incorporate modest downward revisions relative to the forecasts that underpinned the Budget (from 4.2 per cent and 3.6 per cent respectively), and reflect a deterioration in key export markets.
- The labour market continues to perform strongly and is now close to full employment. The level of employment is well past its pre-crisis peak and growth of 2.2 and 2.1 per cent is forecast for this year and next (50,000 and 48,000 jobs respectively).
- Unemployment is projected to average 5.4 per cent this year, down from its peak of 16 per cent in 2012, approaching 5 per cent by 2023.
- The fiscal accounts (General Government Balance GGB) moved into surplus last year for the first time since 2007. For this year, a general government surplus of 0.2 per cent of GDP is projected. This is an upward revision from Budget 2019 and takes into account the impact of stronger-than-assumed corporation tax revenue.
- Our debt position continues to improve, with our general government debt-to-GDP ratio falling to 64.8 per cent at the end of 2018 and set to decline to 61.1 per cent this year. However, the ratio of debt-to-GNI* is projected at 107.3 per cent for this year.
The Minister for Finance and for Public Expenditure and Reform, Paschal Donohoe T.D., today (Tuesday) published the Government’s Stability Programme Update 2019 (SPU). The SPU sets out revised macroeconomic and fiscal forecasts for the period 2019-2023, upon which the policies to be set out in the forthcoming Summer Economic Statement 2019 will be set. The macroeconomic forecasts underpinning the Stability Programme were endorsed by the Irish Fiscal Advisory Council on 5th April
Since the publication of the Department of Finance’s autumn forecasts on Budget day, the external environment has become more challenging. From an Irish perspective, the pace of growth has slowed in key export markets, with a loss of momentum particularly evident in both the euro area and the UK. At the same time, some domestic indicators have moderated in recent months. Accordingly, the Department has revised down its forecast for GDP by a quarter of a percentage point this year and next.
Notwithstanding the downward revision to the growth projection, the forecast for the budgetary position has been revised upwards, with a surplus of 0.2 per cent of GDP in prospect for 2019. This reflects the very strong performance of corporation tax in the final quarter of last year and in the first quarter of this year.
Commenting on the SPU, the Minister Donohoe said:
Despite the less favourable external environment, the Irish economy remains in a strong position, and this is paying dividends in the labour market where an additional 50,000 jobs are expected to be added this year. We have also confirmed that the General Government Balance moved into surplus in 2018 for the first time since 2007. This reflects the hard work that has been undertaken and the right policies pursued to get us to this point.
We cannot be complacent, however, as there are serious risks on the horizon, not least of which is the nature and timing of the UK’s exit from the European Union. It is absolutely vital that we continue to build up our fiscal defenses, so that we can continue to support the economy, and provide for society, if, and when, these risks materialise.