 I think I got the dull and boring job this morning of looking in detail at these new procedures. First I think I should say that I was heavily involved in the Maastricht Treaty when I was in the Department of Finance, so I bear some responsibility for where we are now. Not going to say that it was a bad thing that we shouldn't have done it because I certainly think it is a good thing and particularly when I was in Luxembourg at the time that the coins and notes came into operation I was able to get rid of the folder I had with German Deutschmarks, with Belgian Franks, with French Franks and Irish Pounds because in Luxembourg you're so close to the border you'd be crossing over rather regularly to all of these countries. So even from that point of view it was absolutely wonderful. But I know at the time that we were setting it up everybody was aware that the economic side of it was much less developed. There were things put in there in the stability and growth pact and the budgetary conditions set out in the Maastricht Treaty itself. It was expected that that would evolve over time but at that particular time there certainly wasn't an appetite to go much further than what was put in that treaty. But of course as we know not even what was put in place was implemented properly, not a mind moving on and I think we can all remember back in 2001 I think it was when we were the first country to be given recommendations to change our policy because we were breaching the broad guidelines of economic policy having an expansionary budget or two expansionary of budget and we got that great economic philosopher who said when we have money we spend it, which was the reaction. In retrospect it was quite clear that we were expanding too fast at that time and should have been taking action. So after the crisis we've moved on to look at what more needed to be done, what more broad sort of issues do we need to look at beyond just the budgetary, the direct budgetary one, and what greater level of coordination do we need in economic policy. That has led on to the new procedures and processes that have been put into place and I think the question that we need to ask today is not going far enough but are there too many procedures in place now, is it far too complex and are we really threshing around rather than looking specifically at the real issues. Michael McGrath mentioned the European semester which is a strengthened yearly cycle of economic policy coordination. We kept what was there in the Maastricht Treaty and the stability and growth pact but added on the treaty on stability, growth and convergence in the EMU, added on the directives and regulations in the six pack and the two pack and then added on top of them as well the EU 2020 strategy which has five key targets for the member states and individual targets specified for the member states and then also seven flagship projects in the EU which seems a rather lot to me and then we have the Euro plus pact added on where the Euro member countries make specific commitments each year to go beyond what they are otherwise committed to do and we have the reverse qualified majority brought in which is designed to make it easier for commission proposals to get through and that says that instead of needing a qualified majority to accept commission proposals you need a qualified majority to reject them which is a much more difficult thing to do. Now the surveillance starts with the annual growth survey which comes out around October September October every year and it looks at the overall growth in the community wherever you are going and what are the problems and for the last three years in a row they have actually listed the same five objectives that we should be pursuing and then the member states submit their stability programs or their convergence programs stability programs for the Euro members and convergence programs for the others and their national reform programs and in them they include the response to the Euro the EU 2020 strategy and the Euro plus commitments and they then lead to the adoption of the broad economic policy guidelines and the country specific recommendations that member states are asked to follow and as well as one good thing those country specific recommendations have been there for some time but now member states are asked to report on how they have implemented them so instead of just having them there and then they get ignored you now have to at least show that you have done your homework and have done something about them and are taking them seriously. Now in the budgets we are supposed to take those recommendations into account and see about fulfilling them. Now in the growth survey the overall fiscal stance of the union is looked at but I think people in this country would be wondering why the countries that have room for maneuver aren't asked to use that room for maneuver a lot more than they are to help the ones who need to take austerity measures but all that the Commission has been doing in recent years is running the policy of differentiated growth friendly fiscal consolidation which in layman's terms means that take action to try and promote growth but for example promote capital expenditure and reduce your current expenditure or change your tax system in a way that promotes growth but while keeping the revenue unchanged that sort of thing. And I think part of the reason for that is that the overall budget position is now very constrained that our commitments on the overall budget through the treaty on stability and coordination now requires us to get down to a deficit of no more than a half a structural deficit of no more than a half percent for most countries you can get to 1% if your debt level is below the 60% mark. Now the structural deficit as opposed to the absolute deficit does leave some room for maneuver when you're in a cyclically bad situation but I think there is difficulty in defining what the structural budget deficit is which this is what the structural position is about the cyclical position is which makes it difficult to actually implement this but hopefully over time and I think there are efforts within the union to get more consensus on how it should be measured particularly for a small country like Ireland. Then the debt to GDP ratio has to be moving towards the 60% and reducing by one twentieth of the excess every year. Michael mentioned, Dr Graham mentioned the medium term objective that we're all have to have to set out as well but that medium term objective is simply that her order to reach the minus a half percent or minus one percent or do better than it. You can't have a medium term objective that says well we're going to stay up to two percent deficits or anything like that at all. And down to the medium term objective has been reached there's a specific provision that says your expenditure your annual expenditure growth must be below the medium term rate of potential GDP growth unless it's matched by a discretionary revenue increases so that's a barrier or a curve on increasing your expenditure. And if there's a significant deviation from your move towards the medium term objective there has to be an automatic measure there and we have put provision in our legislation that says if the commission finds that we're not moving towards our medium term objective properly that the government will bring proposals to parliament within I think it's six weeks of getting that recommendation. So to say it's pretty well constrained on the budget position. Now medium term plans for at least three years have to be published budgetary plans by published in April in disability program and as we heard the draft annual budget is to be submitted by the 15th of October adopted by the 31st of December and both of these both the three-year program a three-year plan and budget must be based on a independently prepared or endorsed macroeconomic forecasts. Now the original version of these proposals said it had to be based on independently prepared macroeconomic forecasts. There's only a late stage that that's such changed into prepared or endorsed and I could see the hand of the the the Irish officials in that sort of change although after others may have wanted it too. Now when budgets are presented the commission can't just change the budget they can't go that far budget they can give their opinion and if there is a serious non-compliance with the commitments under whatever commitment since literacy plans the good commitments to get towards heading towards the medium term objective the commission can request a revised budget to be prepared but that would only be where there's serious non-compliance. Now we've gone through the first year of this draft budget being submitted and it is only the euro countries that have to do this that the commission having reviewed the budgets submitted in mid-October happily found that none were in serious non-compliance so they didn't have to take out the heavy hammer but they did divide the countries into into groups and they found that five were compliant with their stability disability growth pack provisions only two of them fully compliant which happened to be Germany and Estonia indeed they found that Germany was exceeding its medium term objective so going further than they needed to go three had no margin for for slippage they're okay but no margin for slippage they were France the Netherlands and Slovenia they found three broadly compliant but may deviate from their medium term objective so they're saying you're you're just about okay but you better they keep an eye on developments they were better you're lost straight up here and go back here and they found five posing a risk of non-compliance and that they should do something to ensure compliance effectively saying we don't really believe that you're going to achieve your objectives on the basis of what you have put forward there they were staying into the Luxembourg and Ireland and the other countries were not subject to the process this year which may explain why our budget wasn't marked as being a draft budget when it was presented next year we're now throughout of the program we will have to go through this process the commission will look at our budget we did present it to them in advance this year and got there we consulted them anyway and they said that's okay so I suppose we did go through the process but the commission report on on on assessing the draft budgets does not cover the Irish budget or any of the others in a macroeconomic program now the stability and growth pact the excessive deficit procedure are still there we still have the overall master treaty targets of our ceiling of three percent nominal deficit I'm not sure that in future if we do get down to our medium term objectives I don't think this three percentably very relevant anymore but as soon as when it's in the treaty it's difficult to change it the preventative the excessive deficit procedure is still being fully implemented and has been strengthened under the the new regulations and directives and particularly I think strengthens the what's called the correct the the preventative arm of it that trying to make sure people take action well in advance of getting into an excessive deficit that they there is provision there now for making recommendations if a country is heading towards an excessive deficit and indeed looking for a an interest bearing deposit if the country doesn't take account of the recommendations from the commission and yet another new requirement in the excessive deficit procedure is that an economic partnership program has to be prepared by any country going into an excessive deficit procedure or having a change in the conditions or in the requirements under the excessive deficit procedure that sets out the policy measures and structural reforms to be taken to correct the excessive deficit now happily that is only deep to be prepared once you don't have to do it on an annual basis and it's to be incorporated into the the stability program or the convergence program but it is yet another yet another new process that has been added on now the macroeconomic imbalance procedure has been the big one that we will have to put our faith in and it's trying to look wider than the budget deficit and look at all the other economic issues that are there to try and prevent the emergence of great harmful imbalances and correct any that are already there and under this the commission each year prepares an alert mechanism report which is based on 11 indicators that have been selected and we'll just look at them in the next next slide and using these indicators the commission identifies where in what countries need an in-depth review to be carried out to see do they have a real problem and this year 16 countries have been identified as needing an in-depth review there were 13 last year this year Germany Luxembourg and Croatia have been added to the list in Germany's case it was because the current account deficit sorry current account surplus was exceeding six percent on average for the last three years and that is the ceiling on that particular indicator and of course we did have some negative reactions and the German press and etc to Germany being singled out for an in-depth review but of course the in-depth review doesn't mean that action is going to be taken it only leads to the the review taking place and at the end of the review the commission then decides is there a problem do we need to take action there is provision for sanctions for recommendations we made for sanctions to be applied if people don't do something about their their imbalances so far nobody has been put into the imbalance the excessive imbalance procedure all the commission have done is make recommendations for people to take some action now the the myth doesn't apply to Ireland yet or to the other countries in the adjustment programs but our statistics are covered in the alert mechanism report but they say in relation to Ireland that they will look at Ireland when we have exited the program so we can expect them I'm not sure whether they'll do something early this year or wait until next year but we're not covered by that procedure just at the moment now the indicators are external imbalance and competitiveness on the one hand and internal imbalances on the other covering current account situation than net international investment position employment etc so there are range that have been identified by the member states and the commission as being the the the relevant ones that we need to keep an eye on and I suppose if if we had been looking at them as closely as we will now if we had looking at them in the past we might have been identifying the the problems that are coming up rather faster than we did but it does depend on people accepting that the that the commission proposals in their case are relevant and that they're willing to do something and not just say I will I mean we're going to have a soft landing so why why why why worry now the strength and surveillance for Euro member states infinite in the programs are receiving financial assistance I think Michael already mentioned that we will be kept under stronger surveillance until we have repaid 75 percent of the financial assistance now as far as I can see that will only mean we might have visits more often from the commission and indeed the IMF for a while but is not going to require us to do too much more than that now there are some more proposals on the table that are being considered such as proposals for mutually agreed contractual arrangements which was discussed at the last European Council meeting that come back with more proposals later in the year this is an idea that where we need big reforms that a country may agree to carry out those reforms but get some assistance from the other member states or from from the union to help them to implement these reforms it's not clear who's going to pay for it or whether it's going to be loans whether it's going to be grants or what it's going to be I find it difficult to see it really taking off and the discussion at the last European Council meeting didn't get too far rather than saying we'll come back to it review it further and come back to it there are other things like that that are on the table which may add to the list of things where there's a requirement that we have ex ante discussions of major economic reforms in each country that they should be discussed at European level before we implement them how that's going to happen is also being looked at at the moment but just to conclude the I mean the processes have been revamped have been extended and I suppose from our point of view it's good that these apply to all countries both small and big so Germany and France and others are just as subject to it as we are whether they will accept it whether they implement things when they're told to or not is another matter certainly last year when France was told to do something about its pensions in the country specific recommendations the president said oh we will not be dictated to by Brussels we will do what we want when we want and but in practice they were already implementing some reforms are developing reforms anyway but didn't want to be seen to be doing it at the behest of Brussels so as I said at the start a lot has developed there is a great new procedures there but there may be too many at this stage or certainly too many targets to be met at the one times I don't think any country can be implementing all the country specific recommendations and the targets on the the 2020 strategy and the euro plus pact we need a smaller number of targets I would have thought rather than a larger number okay