 Good morning everybody and I'd like you to welcome to this second session for this morning's meeting. My name is Frances Rowan. I'm Chairperson of the National Competitiveness and Productivity Council and I'm chairing this session today and on behalf of the IIEA I'm particularly delighted to introduce the official launch of the OECD Economic Survey of Ireland. It's one of those points in time where we get that external view, that I always think small countries look out and look to see what others are doing and others are saying and this is our ystod o'r ysgol ychydigfaint o'r cyhoedd sy'n ei wneud yn ein gwaith o'r AUCD. O'r cyfeirio am y bryd o'r cyhoedd yn y momenten, yw y maen nhw'n ei gweithio mewn gwirioneddau yn ei gweithio i'r gwirioneddau yn ymgyrchol Llywodraeth ac allan o'r myfwyr yn Ynwys yn Yurupol, ac i wnaeth y maen nhw'n ei gweithio'r ysgolwyr digwydd rydyn ni'n edrych yn yw'r gweithio yn relasio i rhaiol am y gweithredu mwyaf o holl a ychydig gan gweithio gymwyl, ac am gweithio'r gweithredu meddyliau tankaeth ymgyrch. A o'n rhai o'r pryd o'r cwysydd yw'r gweithredu, ydych chi'n dda'r cyf antidodaeth o gyfrifiad yma o hynny o gyfrifiad. Yna'r ffordd am y cyfrifiad o'r rhannu o gyfrifiadau yma yw Vincent Cohen, ynglynent yn dwyr ddeblus o ddebyg o gyfrifiadau o gyfrifiad o gyfrifiadau o gyfrifiadau o gyfrifiadau Ac rwy'n ddechrau i gael fy mynd i'r ddawn i'r cyfnodd. Rydyn ni'n gweld i'r panoedd yma, ac yn ein gymryd yma, ynddyn ni'n ffant ym gyfnodd ar y ddioledau ar yr OECD, ac John McCarthy, mae'r ddechrau yn ffant yma, yn gyfnodd gyfnodd ar y ddefnyddio'r phoes. Rydyn ni'n bwysig i fynd i'r parwydau cyfnoddau, mae yna'r cyfnoddau a'r cyfnoddau ar y gwirig yn y ffant defineiddoch chi o'r OECD, mae'r dyfodol yn ymdweud â'r ddifallu gyda'u ddefnyddio gyda'r iawn. Yn ystafell yma, mae'n gyntafol yma yn oedd ystafell o'r Alucid Cymru, ac mae'n meddwl am ddifoedd cyfnodol yn ymddangos yn ymdweud a'u sydd fydd yma. Yn ymdweud, mae'n cyffredinol yn ymdweud â'r IFF a'r Ffnwyd ymddi Frans. Yn ymdweud, mae'n cyffredinol am yr IFF a'r cyffredinol i'r cyflym. Ierdd o gafodd o bwysigwyr. Trin iawn. Pwysighodd amser amser mawr, o bwysigwyr. Yng nghymru, gwoes ymweld ar fy f thighswyd. Ac rhan o'n iawn, yma'n ysgwrdd hynny. Yn yr ysgwrdd ymddiffydd, ac yÙm ysgwrdd hynny aethaf ymddiffydd. a'r fflaen iawn yn y gallwn maen. Wrth gwrs, ac am ychydig i chi'n gynllun ei brifatol. Dwi'n ddweud ar gyfer y cyfritiaeth, am y prifatio ddyddio'r cyfritiaeth hefyd. Y cyfrifio Cymraeg ei wneud ar gyfer hyn yn cael ei bwysig. Gwefyrd y pandemul yn siaradu. I was spared lasting damage thanks to robust exports, extensive and swift policy support, and a successful vaccination rollout. I looked at the numbers this morning. This is not in the reports, so maybe it's more interesting. Ireland is now one-third bigger in terms of GDP than it was pre-pandemic. I can't think of any other OECD country that is in this league. Yn mynd i'r ddweud y dymaeth modifiad yn ymdillig mae'n 9% ffarnwyr o'r ddechrau, dydyn ni i'n fwyllent yn cael ei ddweud. Yn amdannodd yn credu, ddim yn rwy'n dechrau, ond yn ddiddordeb yn ddiddordeb i ni'n ddiddordeb i'r ddiddordeb i'r ddiddordeb i'r ddiddordeb i'r ddiddordeb, felly yna'r rhannog yn rhannog i'r amdannodd, yn mynd i'r cyhoedd. Yn ymdillfydd, yna'r clywed ymlaen, thank you to support policy, labour markets have resiliant on Ireland, unemployment is low compared to other OECD countries and vacancies are relatively high historically not compared to other EU countries that much but definitely ac yn ymdweud yr uwch. Felly, yna yma ychydig. Eiland llawer o rhesgwyr i Llyfrgellau Rhesgwyr yn ymdweud yma, ond wrth gwrs gyda'r ddweud yma i'r cyffredin ar gyfer y cyfosidol. Ond yma, yma, yma rhesgwyr rhesgwyr ar ymdweud yma, amdano'r Cyfrannu Cyfrannu, yn ymdweud yma yw'r cyfrannu cyfrannu, a'r cyfrannu cyfrannu, ond mae'r cyfrannu yn ymdweud yn amlwyd. I told her energy prices are up 43% on a year earlier in Ireland, she said, no, no, no, they are up at least 100%. Next slide please. So inflation in Ireland is about 9% on the latest numbers for headline inflation, a tad less than in the Euro area where it's 10%, but still uncomfortably high. And the main driver remains the these energy prices. Next slide please. And inflation is also spreading core was around 5% in October, we don't have November yet, and around 60% of goods in the CPI basket are recording price increases of 4% or more. So like other OECD countries, the government has stepped in to cushion the impact of the shock on households and firms. But with this context with with price stability at risk in the area and I'm speaking here in the presence of the chairman of the Euro group. It's important that the fiscal policy that does not continue to add stimulus to to the economy, and that fiscal support if needed and some of it is indeed need still be temporary and more targeted than it has been so far. And we note that Ireland is ahead of other EU countries in this respect with in budget 2023 a growing share of the support that is indeed meant to be targeted. Next slide please. These are this is the usual table with our macro projections. So we see growth this year so around 10% for GDP remarkable number. We see still high inflation, which will undermine growth going forward so growth will only around 4% in 2023, and only a bit over 3% in 2024. By recent standards after the rebound, this may look a bit subdued, but of course, if we look across the board at other OECD countries or other EU countries, this remains extremely dynamic, helped by continued dynamism in your multinational dominated sector. Next slide please. So now let's turn to some of the key challenges we concentrate on in our survey that the macro is only a small part of the story. So, the fiscal position is currently incredibly strong. Minister you are recording a surplus this year for the second time during your tenure in 2018 that was balanced now a surplus. This is really remarkable given the shocks that have hit the Irish economy. You are facing major fiscal pressures down the road to do with aging pension health spending, with the need to ensure adequate supply of housing and the need to spend for climate against climate change. Next slide. So looking at this year at the cornucopia. This is it's always great to have a lot of money come in but as you minister and as John always remind us this and as we were reminded this morning in the first session as well. This money comes in large part from a very small number of firms. So there is a major concentration risk, which probably overshadows any of the risks associated with what's going on with BEPS at the OECD. We are really very happy to see that two plus four billion euros have been put in the absolutely renamed national reserve fund for 2022 2023. This is definitely the way to go when all this money is coming in. Next slide please. So in the past fiscal policy has been very pro cyclical notably around the global financial crisis. And this has been felt in investment the current investment needs and housing and healthcare partly a legacy of this. So going forward recurrent spending should not be allowed to drift up when revenues are exceptionally strong and the new spending rule the 5% normal growth spending rule, which is a break from the past. When I have it, I spend it. I will not name who said that but you will know. The break with this approach will help increase the resilience of the Irish economy to future shocks and minister in your new role soon at the helm of public expenditure and reform. You'll be well placed to ensure adherence to the rule that you have set after the present temporary deviation. Of course this year we're spending more but there are very special reasons. And our report suggests that giving legislation the status to this move could strengthen it. Next slide please. So let's look at what public debt is high on a per capita basis in Ireland, which is maybe an unusual angle but the relevant angle we think about intergenerational equity. And so despite all the money coming in fiscal prudence is really important. Next slide please. It is because the population is aging faster in Ireland than in many OECD countries. This was alluded to and challenged a bit in the first session this morning. We are clearly among those who believe that aging will bring a lot more costs for propensions, long term care and health. We have run simulations to 2060 where it appears that Ireland is facing an extra 6% of GDP almost and spending down the road associated with these demographic factors. Next slide. So we also do the typical debt sustainability analysis in the report here to 2050. And we can see that in the baseline scenario where no reforms are put in, we are drifting up for the debt to GDP ratio. The brown line that you can see depicts a scenario where there is pension reform and a greater efficiency in health spending makes it possible to contain public debt even to bring down the public debt ratio. And this will require action. In particular, it will require to raise the pension age in a context where life expectancy continues to rise across countries after the hiccups of course associated with COVID. Next slide. This just summarizes our recommendations. Next slide. I've already mentioned those. So the thematic focus of this survey is health care, which unfortunately is quite topical in the wake of COVID, but the health system here is really idiosyncratic. I mean, many things are idiosyncratic on the island. John, you like to talk about Irish volatility as being an order of magnitude different from elsewhere, but health systems also very peculiar. Next slide. Over all, the health of the Irish population has has improved and is life expectancy is compared quite favorably to other countries. Next slide. Right to keep to the 15 minutes. I'm really running through the slides. So we had a period of retrenchment, as I mentioned earlier for spending on health. Health spending has accelerated in recent years. And now counts for a very sizable share of overall government spending about one fifth. And there are further pressures coming down the road. So it's really important report emphasize the need to restructure this system in line with launch cares ambitions. And the health care, of course, was sort of derailed a bit by the pandemic, but it's important to move ahead and to move away from a largely hospital based system to one that better integrates primary care community and long term care. Next slide please. I'm really centralized. And so one of the elements of strong scare is to have some, some decentralization with in particular the creation of regional health areas. But making the most of those requires a funding model that is based on the actual needs of regional populations with improved data availability and governance, and notably by extending the use of digital tools we saw this during the pandemic. So it's a great inspiration and linkages between the data sets. It's very striking to see how disconnected. A well known challenge here is waiting lists. We think that the planned and ongoing initiatives to increase a public funding capacity. Next slide please. Thank you. The long standing challenge with relatively high housing related costs as a share of household expenditure close to 30%. Next slide. Housing is constrained by a number of factors. There's the regulation and permitting system that is complex and slow. And then there is the system of judicial reviews. There are construction costs that have gone through the roof recently. And there is a lack of workers to build. And so the sector has more demand for workers that then supply. In this context, we really welcome the 2021 housing fall strategy, which is very comprehensive and then seeks to boost residential accommodation improved affordability address many of these ills. Next slide please. In our recommendations though, we really think it's important to prioritize the supply site oriented measures that are included in this strategy. There are also demand side measures there, but demand is strong enough. We really need to fix supply here. Next slide please. So last but not least, the importance of climate change here Ireland is not among the OCD stars. And the context is, of course, more difficult, even than we thought earlier with energy security now coming big time into the picture. Next slide. Like in other OCD countries, additional investments and policy measures will be needed for Ireland to achieve its ambition of net zero by 2050 in a cost effective way. And we welcome in the report, the establishment of carbon budgets and of sexual emissions ceilings as a first step in this direction. Next slide. So emission reduction in the power generation sector is key. Ireland has stepped up its efforts to develop renewable resources and the targets in the climate action plan are to be ambitious. And we will require major investments in generation capacity, both onshore and offshore wind turbines in particular, and then the associated grid infrastructure and like housing, streamlining and simplifying the planal and judicial review processes will be key. Next slide. Yn y bwysig, Ireland stands out with a very large sector, it's a share for agriculture, 36% of greenhouse gas emissions and transport is the other big sector with 18%. It's particularly difficult in agriculture as we know in my shop because we also cover in New Zealand, which is facing a similar challenge. Without sufficient progress there in agriculture, meeting the 2030 targets will require even greater efforts on the part of all the other sectors. Next slide please. So, in this, therefore, one of our recommendations includes to price price of methane emissions. And the other is to realign transport policies to facilitate the provision and use of low or no carbon travel alternatives to private cars. Minister, ambassador colleagues, the OCD will continue to work with Ireland on all these reforms and to help deliver sustainable and equitable growth. I was reminded in the first session that Ireland stands out with a relatively inclusive income distribution after tax. This is indeed a very precious feature. And we will continue to work with you minister also in your other job, your night job or I don't know how to call this as ongoing chair of the Eurogroup for which warmest congratulations. Minister, could I ask you to go to the podium please? And as you know, this is the unflathable minister for finance and the very hardworking minister who's also being on the major stage within Europe. I think everybody in the room knows who you are and I'm sure everybody online knows who you are, but great pleasure to have you here to respond to the OECU report. Thank you. Thank you for your answers. Good morning, ladies and gentlemen. And I want to begin by welcoming you all to Dublin Central. It's a great privilege to have such a gathering in the heart of this wonderful constituency. And as I approach the end of my tenure in the Office of Minister of Finance, there are a few places that I would rather be than be engaging with the Irish Institute of International and European Affairs. And also engaging with an organisation that I respect so much and plays such a valuable role in economic policy here in Ireland and across Europe and indeed across the world than the OECD. And it's particularly appropriate that I should be here with the OECD this morning, given the final things of agreement in relation to the minimum effect of tax directive in Brussels this week, which of course the OECD plays such a critical role within across the world. And if I look at the over five years I've now spent as Minister of Finance, I think it's fair to say that the organisation that I had the most engagement with on many topics within corporate tax were my good colleagues and partners within the OECD. And it is so important now that we're able to make progress in operationalising the political agreements of now over a year ago, because they are vital for the stability of global taxation and global trade in the years ahead. And also because the alternatives to this approach would pose so many risks, particularly to small open economies. What I will do of course in my time with you this morning is concentrate the rest of my comments on this really important and really, really timely economic survey of Ireland. And I think it's to the credit of the OECD to Vincent and his team that not only do they engage with leading quantitative indicators regarding the performance of our economy, but amidst the qualitative indicators they engage with, they find time to engage with our tax advice. And I can only hope this is an approach that is carried out in New Zealand and in Japan in the time ahead. And Vincent, we look forward to benchmarking the feedback you get from them. But I am particularly happy to be here with Vincent and with his team, because I had the opportunity to engage with them early on in the year. And I saw at first hand, as I always do with the OECD, the sophistication of their engagement that has led to a very nuanced, a very insightful and indeed a very wise evaluation of where the Irish economy stands at the moment. And as we evaluate this latest analysis, we do so in the context of the Irish state last week marking its centenary, and indeed the title of this morning's event acknowledges that 2022 is also the 100 year anniversary of the Department of Finance. And we've had many opportunities across this year to reflect on the history that has got us to this point. And we've also had some lovely opportunities to reflect on the history of the Department of Finance. And as a book lover, it is to my great pride that we published volume two of the history of the Department of Finance. That's available in all good bookshops today at an appropriate price. And I'd recommend it all to you, if not for Christmas reading, but certainly for reading for 2023. But today's about looking to the future. It is also a discussion that has been greatly enabled by the report of the Commission on Transition and Welfare, which is a very fitting accompaniment to the launch of the report by the OECD today. And this is because both of these reports focus on the long term and the structural dimensions of our economy and our public finances. And this focus on the long term is particularly needed because as a politician and with my colleagues in the Department of Finance, we spend so much of our time grappling with the issue of today with the urgency of the short term. And as the department moves into a second century, a continued focus on what matters beyond the day to day, month to month, even year to year, is just vital. And that is why there are so many themes that are worthy of consideration in the report today. And that's why this event is also so valuable. In regard to the OECD, we are very proud to have been among the founding members of the OECD more than six decades ago. It is a relationship that is really important to the Department of Finance and to the Government of Ireland. And we believe it is a relationship that is positive and we hope mutually beneficial. The OECD provides evidence, it provides insights and it provides independent analysis. And by doing this, it of course facilitates international collaboration. And as a small open economy, we benefit hugely from this engagement. And I also see the OECD has been a great resource to the work of the department and indeed to my work as Minister. And the founding principles of the OECD, a free trade of transparency and equitable growth, are themes that continue to be very relevant to the economic development of Ireland. And this report speaks to those themes. The OECD is renowned for the quality of its work. And this report, this study is so consistent with that reputation. It highlights what we're doing well, but it's equally clear about those areas in which we can improve upon. And it comes of course at a time of such global uncertainty. The pandemic posed such a major challenge and just as we emerged from that Syrian test, Russia launched its appalling war on the people of Ukraine with all of the security, humanitarian and we're focusing here today on the economic consequences of that war. Today's however, Ireland has weathered those economic consequences relatively well. The short term economic outlook for the Irish economy, as noted here in this report today, is broadly in line with that of my department. And those inflationary pressures and higher interest rates, lower growth, excuse me, lower demand, growth in the Irish domestic economy is expected to subdue into next year. And similarly, as some of our trading partners experience tough economic conditions, our exports to them would be affected. However, the solid position of our public finances before the pandemic has enabled us to respond forcefully to those challenges. We've been able to provide significant support while at the same time continually making the case that we can't do everything. The role of government is to protect in particular the most vulnerable and budget 2023 aimed to do that. Also aimed to provide broad based support up to a certain level while avoiding compounding our inflationary challenges at home. We want to be in a position to do the same again in the future and sensible management of our public finances is critical to doing this. And this is why we do aim to stay inside the parameters of the medium term budgetary framework, which was set out last week, last year. However, critically, in budget 2023, I provided for nearly 1% of national income to be deposited into the National Reserve Fund this year, with nearly 2% to be transferred next year. And this will ensure that permanent increases in public expenditure are not financed using potentially transitory corporate tax receipts. And I want to emphasise that point. It's been a long standing observation regarding the risk of corporate tax receipts changing in the future. It's an observation and an analysis that has been led by the Department of Finance. As we come to the end of 2022, we will do that with an Exchequer surplus in November of 12.1 billion euro, having deposited 2 billion euro into a National Reserve Fund. So we've experienced another shift change in corporate tax receipts since 2019 that has not funded permanent changes in spending or permanent changes in taxation. It has funded, as the pandemic receded, a significant improvement in our public finances. The critique that we occasionally offered of ourselves that we heard from others has been comprehensively responded to with that level of surplus and with the decision regarding the Reserve Fund. And we need to do this not just because of the risk of what could happen to tax streams in the future, but also because, as Vincent emphasised, Irish public debt on a per capita basis remains very high. We are now in the midst of a significant improvement of our debt dynamics, but that can't take away focus from the fact that our stock of debt per person is still high. And this is why delivering budget surplices will help us to achieve a continued decline in our debt to national income ratio in the coming years and also make progress in moderating the stock of debt itself. And we'll use those improved public finances to make progress and many other issues that matter in our economy and to our society, and housing is obviously such a leading challenge. This year we'll see around 28,000 homes completed in Ireland, we're making progress, we need to do more, and I welcome the focus and this report on how we can prioritise supply side policies. Climate change is also correctly identified as a keen challenge. We need to have the right policies in place to respond back to this existential challenge to our civilisation. And this is why last year Ireland bought on a statutory basis a target of net zero emissions by 2050, as well as an interim target of reducing emissions by 51% in 2013. This is such an ambitious target, but it's one we have to reach and no effort is being spared in getting to that point. However, I should emphasise that I don't view this transition as purely a negative one. It creates great opportunities for investment, for green growth, and critically, given our natural resources, it is a great economic opportunity for Ireland. And then turning briefly to the final theme of the report, I very much welcome the analysis with regard to performance efficiency within our health service. And while I believe we have made progress, the focus on this report and rising healthcare demands and its interaction with our ageing population is an important issue that we need to continue to address in the time ahead. But overall, this report does show that for now we are in a relatively good macroeconomic position. We have weathered very recent storms, but we are conscious of what is yet to come. Our economy, our public finances are critical in allowing us to do this work. We have a young population, we have a productive business sector and we do have the potential for a different form of growth in the years ahead. And our position in the world as a democratic, pro-enterprise country at the heart of Europe, which is innovative, which is dynamic, is one that many of my predecessors over the past century would have dreamed of. But now we need to ensure that in the next century we do even better and engagement with our partners in the OECD will help us do this. So I therefore want to conclude by thanking Vincent, his team, for their excellent work in preparing this survey and for joining us here today. And I want to thank you all again for your attendance and I look forward to the discussion across the morning. Thank you. Thank you very much Minister and we'll now proceed to the final part of our discussion in the form of a panel. And just for those of you in the room, you'll be able to ask questions so by raising the relevant hand, Mike will come to you. And for those of you on Zoom, please submit your questions using the Q&A function, which you should see at the bottom of your screen and I'll see if they come in here on the tablets. So I'll just join the panel today. We have two additional members to the two speakers we've had. Mugay Adelaide Macgaun, who's a senior economist at the Ireland desk of the OECD and you're very welcome to Dublin and your taxi driver back to the airport will probably be a major research project for both of you. And John McCarthy, who's senior economist in the Department of Finance. I'm just going to ask John to say a couple of words because he would have dealt very closely with the team going through so he's going to say a few words before we do the Q&A. Okay, thanks Francis and thanks to Vincent for the presentation. I mean just following up what Francis there. It was a pleasure to work with Vincent, with Mugay and other members of the team over the past six months. And you know the sort of cross country comparison. The sort of learning from best practice is where I think that the OECD really enjoys a comparative advantage and I think the report provides lots of food for thought. Just very you know moving off on a tangent ever so briefly on the taxi driver team. I remember 15 years ago when the Troika was in Dublin and they got a taxi from Dublin airport to the Department of Finance and the whole issue was about bilateral loans. They reached government buildings and they asked the taxi driver what the fare was in true Dublin fashion. He turned around with the handout and said 64 billion. So listen I can be very brief. I just want to offer some thoughts on some of the cyclical and structural factors currently shaping the Irish economy and there will be quite a bit of overlap with what Vincent has mentioned there. I mean just by way of background the department's baseline projection is one in which the economy experiences are relatively shallow and relatively short downturn. But I think I would characterize it as one in which the level of economic activity in Q4 of next year will essentially be the same as the level of economic activity in the second quarter of this year. So essentially we're talking about a flatlining of activity over the next four or five quarters. I think there's three sort of forces behind these the headwinds. The first of course is that the terms of trade shock that the energy price shock, which we're all familiar with. But what I think we've seen over the past couple of months is a broadening of some of those inflationary pressures. Just to kind of give some numbers there, the CSO in the CPI basket covers about 620 items, 620 goods and services, 75% of those, so three quarters of those are now running at inflation rates in excess of 5%. So it's gone from being a very much an energy price shock to a more multi-dimensional issue. And I think that's the case both in Ireland and elsewhere. And there is a very legitimate question that economists are now asking as to whether we're at a tipping point, as to whether we're moving from a sort of the great moderation into a sort of a new regime kind of situation. And of course, when I talk about the great moderation, I'm talking about the three or four decades in which the volatility of economic output was much less than previously. And the level or the rate of inflation was much lower than would have been the case prior to that because of outsourcing, because of elongation of supply chains, because of the integration of China into the International Division of Labor, etc. So there is a really legitimate question there as to whether we're into a sort of regime change. The second issue then that's sort of behind that the flatlining activity is of course the monetary policy cycle. Everyone is aware of the sort of the front loading of policy normalization. The policy rates in the euro area by about 200% of basis points over the past year or so. If we were having this conference tomorrow, I think the figure would be even higher. And of course that's a very aggressive pace of monetary typing. And as I think everybody knows, monetary policy operates with a lag. So you're going to see the impact of that weighing on activity over the next year or so. The third factor then is sort of the external demand where I think it's fair to say that the silver linings are few and far between continental Europe. You're looking at the epicenter of the energy prices, although I do think the risks have shifted from winter of this year to the winter of next year. There's a lot of stories there now we will get through. There is certainly a pathway through, I think, you know, the winter of 2002 winter 2003 into the following winter. So I think that the problems are for next winter. In the UK, of course, obviously still a major trading partner for Ireland. We're seeing serious cyclical issues. But I guess I would be more worried about some of the structural issues there and everybody is aware of very weak productivity growth, anemic investment, some problems on the current account of shrinking of trade, etc. So real structural problems there, which will confront us in years to come. In the US, obviously, we're seeing a slowing of demand as monetary policy tightening takes effect. So you have sectors that are sensitive to the interest rate cycle like residential investment really beginning to come back. And then the other issue then, of course, is the disruption to the Chinese property bubble and the potential for spillovers there. And of course we're also seeing other issues in outside advanced economies. So, you know, we've seen exchange rate realignments that is causing pressure for emerging market economies by way of capital outflows, etc. Although I have to say, I mean, this time last year, you know, we would have thought that the level of capital outflows, the rate of policy tightening in advanced economies would have had a more detrimental impact on emerging market economies. So maybe some resilience there, lots of emerging market economies have been accumulating reserves over the past couple of years. The bigger problem maybe is in lower income countries where you're seeing, you know, debt to stress, etc. A lot of these countries took on dollar denominated debt with the appreciation of the dollar debt service costs and are rising. And something like 60% of low income countries are looking at some form of debt distress. So obviously a very, very difficult economic backdrop. And then the question is what would justify or what justifies our assumption of a short and shallow shock against this very difficult background. Now, the one point I would say here is this is our baseline scenario, and it's certainly not difficult to envisage a more problematic or a more severe scenario. But I think there's four factors that really would sort of underpin our analysis. First, I think is the resilience of the labor market. We've seen a rapid recovery in labor demand. We've also seen a recovery in labor supply. So, I mean, if you look at participation rates, for instance, there are two percentage points behind where they would otherwise been if there hadn't been a pandemic. And this contrasts greatly with the likes of the UK where, you know, you're seeing this being quist, the great resignation or whatever, the labor force is about half a million below the levels in pre-pandemic. Also important, I think, is the strength of private sector balance sheets. Household balance sheets are in a much better position than they were 15 years ago. The leverage ratio, which had been about two in 2007, et cetera, is now below one. We see that households are still saving about one euro in every five, and they have accumulated, of course, a lot of excess savings. Similar situation in the SME sector where, you know, they have deleveraged over the past decade or so. So from a sustainability perspective, certainly private sector balance sheets are in much better shape. And you see this from balance of payment status. So even if you exclude the multinational sector, you know, Irish residents be they the household sector, be they the SME sector, the government sector, the financial sector, are now net lenders to the global economy. Again, 15 years ago, the same sectors were borrowing about 4 or 5% of national income from abroad. So I think that's a great strength. The financial sector then, you know, the reforms that have been implemented over the past 15 years or so, including those at a European level, it's in a much better shape. So the financial sector, and I guess the pandemic was the first wheel test of the domestic banking sector. You know, it hasn't been an amplifier of the cycle during the pandemic. And then the other issue then is the fiscal support measures that have been put in place. And I think various organisations, including the OECD analysis published today, show that the overall approach has been broadly correct. Cushioning household and SME incomes, while at the same time preserving price signals, which I think is absolutely crucial. I'm going to finish now, Francis. So listen, I mean, just to conclude the OECD report does provide lots of food for thought and government will be considering some of those. Finally, on a personal level, I think this is the last time myself and the minister will be on the same panel. I think it's been five or six years. I'm losing track of time. It's obviously been a challenging number of years with several black swarms. But I think we have enjoyed the six or seven years together. And I wish you best in the Department of Public Health expenditure. Thanks, Francis. Thank you, John. So one of the things that came out of actually of becomes out of the report that comes out of the general context in which we lie is the, you know, the current challenges are massive. So how do you get focus on the medium to longer term issues in countries because it's really very hard in terms of the challenges in terms of what the media tends to deal with the immediate, not with those medium to longer terms. And Vincent, I'm wondering if there's anything in the OECDs looking at other countries that would point away in which to try to get that focus on to the to the medium to longer term issues because they're clearly where we need to be. I think it's difficult to disentangle the short and longer run challenges if we look at the energy crisis. Of course, it hits us as a short run challenge, but it highlights our dependence on imports of fuels from unfriendly parts of the world and therefore highlights the need to accelerate the transition towards renewables and other cleaner forms of energy. I think even though we're policy makers are faced with the need to cushion the shock, there's also an opportunity to raise awareness about the longer run challenges. Likewise, if public finances are hit by the costs of support, this highlights the longer run challenges of sustainability. Public debt ratios across the OECD are now 20 percentage points of GDP on average higher than they were before the pandemic. And even before the pandemic, we were very worried about how we would deal with those aging and other longer run fiscal pressures. In the area context, do you see that as a big problem in that ability to get serious focus on the issues that we know are there. I mean, I noticed some of the OECD reports that report on other chapter on health contains recommendations which at least 10 years old because I know it's involved in drawing up some of them myself so they know that these are getting the traction that's needed for these long term adjustments that are there. I would be cautious about an approach that suggests that wouldn't it be great if we could focus less on the short term to create more capacity for the long term, because our society expects us also to give equal priorities where we are in the here and now. And rather interestingly, many of the short term challenges that we now have are the pre shocks to longer term challenges impacting and changing our society. And I think the energy one is an excellent example of it. That actually many of the steps that we need to take to respond back to our energy supply and energy affordability challenges. Many, though not all are consistent with what we need to do for the medium term and long term as well. But even accepting the premise of your question, and as I alluded to in my own statement, it's a continual challenge that I face. How you deal with the private members motion of the week. How you deal with the press conference of the hour, while trying to create the ability to think about where you want to be in a few years time. Ultimately, it depends on institutions, it depends on frameworks, and then it depends on our civil service and our political system, trying to create the capacity to think into the medium term as well. And I think the OECD report and indeed John's excellent summary of where we are now gives us some credit for making progress on that. But I think it's equally open about how we can do that. That's the point I'm trying to get is it's always the medium term issues are always there the immediate ones are the ones everybody's very conscious of, and it's trying to balance those two. And, and I think that that's it. That's it, but particular challenge to get something like, for example, the OECD report, and what's in it today, out into general discussion more widely, because that's really the value of the external viewpoint and putting it in context. And I think we're very dependent, I think on our media to make sure that that happens. It really is such substantive amount of material in the report. So many recommendations that should be discussed publicly and would like to see more of that. What's that happening? Could I ask that there's some questions in the room that anybody would like to put to the OECD or to the minister. But I want to take a particular question straight away. Okay, if not, could I come back to the another issue about adjusting from the short to the long term and that is, you know, amount of resource put aside for capital investment versus recurrent when you're coming into difficult situations and you're trying to manage them. And I'm just wondering again, whether either of our panellys in the OECD would come through the prefer to that issue in order to make me sure that when you're in a tricky situation that the capital doesn't take too much of the heavy lifting and that the recurrent. And I don't understand what the business minister said, recurrent issues must be dealt with. I'm just underlying that the 5% normal growth rule that has been introduced in 2021 is the helpful tool to protect the need for investment over the longer run. Even though it may seem restrictive in the short run in some circumstances, I think it's an important anchor. And it is consistent with fundamentals in the sense that it is consistent with a 3% underlying trend growth of some relevant measure of domestic economic activity plus 2% inflation, 2% inflation. Sounded high a few years ago, now sounds really low. But this would be a way to. The issue with inflation, I've owned enough to remember the big inflationary periods of the past week went on and on for long periods, but he's interesting to see even signs in the states of something beginning to moderation. We all have to deal with inflation now because back to the minister's point, everybody feels that every time they go to the shop, so it's a very immediate impact that people have. Yeah, and I go back to the excellent graph that was up there regarding what happened to our capital stock and investment in the aftermath of the global financial crisis. And I always have a memory of walking by Finsborough shopping centre and a number of buses overtaking me. And I was struck by how empty the buses were. And I also, of course, vividly remember that time in our history in where we had an abundance of houses and most of them in the wrong place. And I think at that point in time, in which our economic activity had become so low that we were not able to use the capital stock that we had built up in an adequate way. It does put a bit of context regarding the capital decisions that were made at the time, not to mention, of course, the fact that we were in funding crisis. But certainly my abiding insight from all of that is the medium term consequences of public capital investment in our economy, under investment in our economy, but also critically, and this is a persistent euro area challenge. Private sector investment in the European economy never recovered from the global financial crisis. And what that means for our standards of living and what that means indeed for Europe and Ireland's place in the world is still a legacy that we are responding back to at the moment, which is why our national capital plan and the 5% spending I think is really valuable. Add two questions, dermis and dams, if you think you might go for dermis first and then dams. Hi, I had dermis earlier from good buddies and question on fiscal rules aspect of it. You know it's been commented to previously that perhaps the rules that applied at a European level parts pandemic were inappropriate for for Ireland. Can I get it maybe a comment from an Irish perspective or a European perspective or an OEC perspective in terms of what kind of principles you'd like in the new rules. When they perhaps come into being in 2024 as is proposed now. So I think there were two challenges about the stability and growth part as constituted and implemented before the global financial crisis. First one is in retrospect, it didn't give adequate recognition for the role of macroeconomic imbalances within an economy, and how that could significantly influence your fiscal performance. At the time and clearly in retrospect, so much of our fiscal performance was driven by where we were with the level of credit within our economy. And that relationship wasn't something that was relevant to the fiscal rules then. And then secondly of course is the issue of the credibility of the rules in terms of how they were implemented before the global financial crisis. I think that with the debate that is on the way now and the Commission go forward to communicate with regard to all of this on the 9th of November. Under the base is now hopefully instantaneously beginning within the European Union. In two qualities that are important to me and the plans that have been brought forward. The first one is, is I think there is a debate that we need to have regarding how death and deficit correction plans, because they need to be credible. They need to reflect the different national dimensions of each economy. But the quid pro quo for that will then be how the commitment to implementation of those plans can be genuine credible and implemented, given the experience that we had of the last rules over 15 years ago. So on the one hand, if you've any insight that coming from the only city, does the only city get into that space of if you do this like the design of systems that work best across a range of diverse economy. Well, we observe that rules is better than no rules, but rules that are not abided by suffer from credibility problems, and as we've seen the end in European context. It's very important indeed that the new setup be both more tailored to the diversity of countries that make up the membership of the European Union, but also guarantee greater commitment to implementation than we have seen so far rather than waivers. Of course, we have witnessed a series of extraordinary shocks in short succession. We may hope that we won't see so many black swans swarming around in the future, but we don't know. To be black elephants in the room actually, if we think about it and security supply being one of them. Dan has it down to Brian's question. Yeah, down from the Institute. A question to Morgan and Vincent, maybe on the healthcare aspect of the report. You mentioned that spending on healthcare is comparatively high, but you also say working conditions are poor. Could you maybe if you have any insights as to why there's plenty of inputs, but working conditions seem to be bad. Any insights on that observation? I think that we think about this whole picture we've been talking about under investment in a number of areas. So I think the health system has been suffering from under investment over more than a decade. So there are some legacy issues in terms of low investment. So I think now health spending has increased. So we're talking about the current situation. But there are all these legacy issues that like number of beds or staff conditions or the quality of infrastructure. So this is what we tried to balance in the report that okay, these are the issues and other reforms and there is now spending, but now spending has to be efficient. You need to have value for money for all this extra spending that's going through the health system to make sure that the reforms that are ongoing deliver the results. So we look at this kind of inputs that's going. What are the results of, for example, in Ireland life expectancy gains have been very high. So the aggregate outcome is quite well. So of course, then you have to compare with other OECD economies if countries that are spending less but having similar outcomes. So I think that the idea is spending efficiency that's our main message. Did you have anything to add to that? No. Unfortunately, the main author of the chapter is not here with us in person. It's the only one in the OECD who understands your health system. Well, as somebody who spent 15 months of my life on health, I cannot believe how complex it is and it does take that. And there's no risk of the quality of the references and what he's considering chapters is really very, very, very tough. I mean, I suppose the final issue comes up and it's implicit in some of your recommendations here today and I'm not going to put those recommendations to the minister to respond to. That notion of having recommendations and the speed of implementation. And I'm just wondering from an OECD perspective, is there any best practice to be learned in terms of how one better realize that the implementation process. I mean, you have the housing for policy and it's getting done. And yet you've got to, you know, you don't want to move away to another policy, which sometimes the expectations. There's some silver bullet out there. There's some great idea we haven't had. There isn't. It's actually all about good, good, steady policy making and implementation. Is there anything on the implementation that you've found in OECD countries that works better? I think it's very idiosyncratic. Some countries are much more pragmatic than others. Some countries really enjoy beautiful plans, but then don't focus sufficiently on how they are implemented over time. Some countries face greater instability than others, which complicates implementation or have a more divided parliament than others. So it's very country specific and we don't have any recipe that we can come up with. Is there any comment on that? If we get these policies, we get these recommendations and then it's the speed at which we can manage to because maybe we're not resourcing ourselves, whether or not to do the implementation. Is that part of our problem? Yes, and I think it is a challenge that we share with many other democracies. I mean, I'm always reminded, I'd be careful about saying this in the IEEA, in the company of the OECD, but that occasional source of political insight and wisdom, which is in particular that great series about political life in the UK. And there's a wonderful scene when a minister is on the way to a school to do a policy announcement, and I think more senior minister rings him up and says, you can't make that announcement now. And the panicked minister turns around to his advice as a civil servant and he says, I need a new idea to announce in 10 minutes time. And the civil servant says to him, right, you want us to come up with an idea that won't cost anything that will make a big difference to people's lives, and that nobody has thought of before. And the minister goes, yes. And unsurprisingly, they don't deliver such an idea. But I think it just does illustrate the point that you're making, which is, for a very understandable political and democratic reasons, there's a constant focus. And it's understandable and legitimate in its life regarding what is the response of today in feeding back and responding to the conditions of our society. I would say what we need to do isn't trying to respond back to that. It is to make focus then on those things that bit by bit over a longer period of time to make a difference. I think it's really just a case to make that over the last number of decades we've managed to do that and managed to make a difference, certainly over the lifespan of our state. There's a strong case to be made about us. And I go back to the earlier question that you brought to me there. I do think it's about the value of institutions, international domestic. It's about the value of policy frameworks that a government manages through year two. And then unsurprisingly as a politician, I would then make the case for the political center, being the other vital Englandians in that mix. I think it's the, it's the, that's very, very, very well, well placed reply in terms of, as you all, as you always do with with with in response to that. But it is an issue of decisions require the political make up with the actual delivery is around what people at the standing capacity of the public service to actually deliver things. So, so, you know, you've got to go through the democratic passage, got up all of those debates and everything that's that's there. But then the question is how quickly can we deliver it. And I noticed some of the OECD recommendations directly would would be around that and the ability to actually implement what government agrees. Ireland have been incredibly well served and enabled by the quality of the Irish civil service. And I see this in the Department of Finance, the Department of Public Expansion reform, like a go through many of the government departments. Do they, do we get everything right? Of course not. We're humans in the perfect world. But by, but, but overall, if I look at the culture and the expertise and the focus that is there, and we have a civil service that I think reflects the best in our, in our country at times. And then what we are gradually doing is building up agencies that are very capable of making a difference. I look at the National Transport Authority, what they're doing in transport. I believe it's really, really strong. And if I look at it more economically, if I would look at the IDA and Pies Island, the National Treasury Management Agency, Mayor Cardin, the chairperson is here today, the Revenue Commissioner. I think there are institutions that you can make the case that when it comes to delivering, they can do it really well. That's what we've had. And I think this is, so it's not actually around, it's around recognising that the economy is so much bigger. You know, when we hit the 5 million population, I kind of got wowed. I never expected to see in my lifetime. And then we basically have a much more complex enterprise sector, we've a much more complex society. And what's required to deliver to that from central government and from the various agencies is going all the time. I think that's the point I'm trying to make. It's around that, it's around that issue, rather than somebody's not doing a job that's being done. Completely. And I'm ever confident that if I'm ever in that taxi with the Irish Civil Service looking for that IDA, they'll come up with it. Well, I think the taxi points are always a good reflection point. As a basis for policy, I have my reservation on the basis of my own experience. Can I thank you all for both the presentation this morning, Minister, for your reply and John for your input as well into the panel. Can I thank all of you here in the room for the questions and we'll end the session now and just to note this was a great occasion to launch the OECD report today. Thank you.