Sustaining Progress - Department of Taoiseach

Chapter 3 Sustaining Progress
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3.1 Overall Objective
The central macroeconomic objective is to consolidate the progress of recent years and to achieve
a medium term growth rate capable of sustaining high levels of employment and facilitating the
evolution of a more equal society. Securing competitively low inflation, sustainable public finances
and social, economic and environmental sustainability are central to achieving this objective.
3.1.1 Context
Over the first two years of the PPF, annual GNP is estimated to have grown by an average of 7.7%.
On an annual basis, employment expanded by almost 77,000 in the year 2000 and by a further 49,000
in 2001 facilitated in part by substantial inward migration. This substantial growth translated into a
further improvement in the unemployment rate - as measured by the Quarterly National Household
Survey (QNHS,CSO), unemployment fell from 5.7% of the Labour force in 1999 to an average 4.6% 3 in
2002. Living standards, assisted by Budget measures, have continued to improve for both those in
employment and those dependent on income support.
International economic activity continues to be sluggish amid uncertainty about the timing and pace
of any pick-up. A period of consolidation is now required in order to protect the hard won economic
and social gains by being prudent in economic policy management and in the management of the
public finances. As a small country, which is highly integrated into the global economy in terms of
trade and investment links, economic conditions in Ireland are crucially determined by the
international economic environment and our ability to trade in this environment.
The full implementation of the new Agreement, including the special initiatives identified in the
previous chapter, is predicated upon a recovery in Irish economic performance with growth picking up
towards potential over the Agreement period. GNP is expected to average 3% growth over the period
2003-2005 on the basis of a favourable international environment, sustained improvements in
productivity, renewed domestic and international competitiveness, and the effective tackling of
supply side constraints.
Achieving the goals set out in this Agreement within the timescale envisaged depends on attaining
the levels of growth indicated above. Should economic growth exceed this level, and subject to the
key principles set out below, additional resources will be distributed in a balanced way to accelerate
progress across the priority objectives of the Agreement, particularly social inclusion. However, if
economic growth falls below the projected level, it will be necessary to re-prioritise or make more
gradual progress in order to adhere to these key principles while emphasising the need to protect
the most vulnerable people. This aspect will be kept under review by the Steering Group.
3.1.2 Looking forward
Consolidating and building on the economic and social progress attained in recent years, in order
to renew the necessary external and domestic confidence in the competitiveness of the economy and
its potential for continued growth, will require adherence to the following key principles:
■ managing the public finances in a way that ensures a sustainable match between resources and
expenditure and that avoids imposing an unfair burden on future generations;
3 Refers to year-on-year average ending Qtr3 2002.