In addition, the new EU system of financial regulation also allows for the imposition of a counter-cyclical capital buffer (CCB), so that banks must build up extra capital during phases in which credit conditions are assessed to be unusually strong6. Tools such as mortgage rules and the CCB would have mitigated the costs of the boom-bust credit cycle in Ireland in the mid-2000s.
With the global recession deepening and domestic demand exceptionally weak, the overall outlook for growth has continued to deteriorate in recent months. Based on what is currently known, our latest unpublished estimates suggest that GDP will fall by over 6 per cent this year, with a broadly similar fall likely in the level of employment.