The Irish Economy JUNE 2013

IrelandGreeceEU Population4,588,252 (2011)9,903,268 (2011)503,679,730 Area84,420 km2131,990 km2 Gross GDP figure€144 billion€227 billion€15,650 billion GDP per capita€35,455€20,400€27,475 GDP Growth %-7.9%(Calendar year 2011) %-6.9%-0.5% 2013 (f) +1.5% D/Finance Forecast-4.3% M/Finance+0.4% (Commission) Unemployment:14% (March 2013)27.2% (February 2013)10.9% Youth unemployment: (15-24)30.3% (March 2013)57.6% (February 2013)23.5% General government deficit/GDP %-9.4% %-6.9% 2013 (f) -7.5%-4.6 % 2014 (f) -5.1%- 3.5% Primary Surplus Target2014 Debt/GDP118%170% Fiscal Consolidation 21% of GDP (since 2008 to end 2015) Over 40% of GDP (since 2010 to end 2015) Total Exports (2011)€92.9 billion€22.45 billion€1.5 trillion Bilateral Merchandise Exports (to end-year 2012) €257 M (€304 M 2011) €24 M (€39 M 2011) Balance of Payments€3.2 billion-€2.2 billion€28.3 billion Inflation (HICP)1.68% (Dec. 2012)0.33% (Dec. 2012) Programme Funding €29 billion (1 st programme) 2011 €31.5 billion€44 billion (2 nd programme) 2012 €21.3 billion€128 billion 2013 €13.7 billion€17.6 billion €18.2 billion €85 billion total by end 2013, including €17.5bn Irish funds plus €67.5 billion EFSF/IMF funds €110 billion in 1 st package, plus €130 billion in 2 nd, to be disbursed by end 2015 Bank recapitalisation€64 billion€50 billion

Origins of the Irish Crisis Sustainable export-led growth of the Celtic Tiger period gave way to expansion reliant on a property bubble Ireland had been running a budget surplus and low debt levels but domestic bubble burst at the same time as the global financial crisis 2010 Powerful and sudden impact on our domestic banking system, on employment, and on government deficits and debt, necessitated EU-IMF programme of assistance Now on road back to sustainable growth and balanced finances with a smaller, well-capitalised banking system

IrelandGreeceEU GDP Growth %-7.9% (Calendar year 2011) %-6.9%-0.5% 2013 (f) +1.5% D/Finance Forecast -4.3% M/Finance +0.4% (Commission) Unemployment: 14% (March 2013) 27.2% (February 2013) 10.9% Youth unemployment: (15-24) 30.3% (March 2013) 57.6% (February 2013) 23.5%

EU/IMF Programme €85bn [€67.5bn in multilateral and bilateral loans, €17.5bn from Ireland’s own resources] 190 individual targets under programme fully achieved Intend to exit the programme and make full return to markets in 2013

Stabilising the Public Finances We are on course to meet our 3% deficit target by 2015 Deficit forecast to be reduced below 3% in 2015 We have implemented measures to yield a budgetary adjustment of €29bn (or about 18% of GDP) since mid-2008 Budget 2013 delivered another €3.5bn of that consolidation Deficit of 7.6% in 2012

Government Deficit Being Brought Down Steadily and On Target *Excludes costs of bank recapitalisations Department of Finance forecasts

The economy has returned to growth Department of Finance

General Government Debt Will Peak This Year and then Decrease Department of Finance % of GDP Department of Finance forecasts

Up over 5% in 2011 and 5.5% in 2012 at current prices Agri-food Exports Up 28% in last 3 years Exports Now Above Pre-Crisis Levels Multinational Sector Critical incl. Pharma, MedTech, ICT, Financial Services Balance of Payments in Surplus for third year in a row after 10 years in deficit Department of Finance Exports Have Supported Growth €m

Consolidation is being implemented in the least growth damaging way possible, with the majority of the adjustment on the spending side Budget 2013 includes just under €2 billion in spending cuts and over €1.4 billion in tax increases. Tax measures include - introduction of a property tax - increases in capital gains and capital acquisitions tax - increase in excise duty on alcohol and cigarettes - increase on motor and vehicle taxes Expenditure cuts in 2013 include - reduction of €10 a month in the rate of child benefit -the reduction of the duration of job seekers benefit - further reform of public service conditions 12.5% Rate of Corporation Tax will remain as a key element supporting inward investment and export-led growth

Restoring the Banks to Health Recapitalised on Time and Below Expected Costs €64bn, ca. 41% of 2011 GDP Consolidated, Deleveraged, Reduced in Size Pillar Bank Strategy in place with 2 main banks, AIB and BoI to focus on domestic economy. Over €40bn in deleveraging achieved Action at European Level As other EU Member States face similar challenges, Europe is working on new ways to break the link between sovereigns and banks

Continuing Challenges Jobs added in 2012 but unemployment unacceptably high Household Debt Elevated Impact of expiring patents in pharmaceutical sector on export growth International Economic Conditions

Our Strengths Flexible, Adaptable Economy 1 st in the world for the flexibility and adaptability of our people 2 nd most globalised country in the world Pro-Business Environment 1 st in the world for investment incentives In top 10 easiest countries in the world to start a business High Levels of Education In Top 10 most educated countries in world 1 st in the world for availability of skilled labour Favourable Demographics Youngest population in Europe Sources: World Bank, OECD, IMD Competitiveness Yearbook 2012, Eurostat, E&Y, Economist Intelligence Unit

1st in the Eurozone for ease of doing business 2 nd highest trade surplus in Europe 2012 saw highest net job creation in Ireland from Foreign Direct Investment in a decade 1 st in the world for highest average value from investment In global top 20 for quality of scientific research