External event contribution
Date and time
15 May 2019
- Overall, there is little evidence the economy was overheating in 2018. In this context, our view is that the structural balance was marginally in surplus in 2018 with a plausible range of 0.0% to 1.0% of potential output.
- The economy is likely to be overheating by the end of 2019 in the absence of a negative external shock such as a disorderly Brexit.
- Baseline average potential output growth of 4.5% is feasible over the 2020s. This sets a baseline for sustainable average annual nominal increases in public spending net of discretionary revenue measures.
- Ireland’s per capita public spending and government revenue is below average compared to ‘peer’ high-income EU countries.
- Given increasing demand pressures, Ireland’s position in the economic cycle, and the negative implications for inclusive growth and public services, it is our view that a package of discretionary revenue measures that reduces net government revenue would be an unwise course of action for Budget 2020.