patrick honohan : ireland ’ s mortgage over - indebtedness against the background of macroeconomic and fiscal challenges opening statement by mr patrick honohan, governor of the central bank of ireland, to the joint committee on finance, public expenditure and reform, dublin, 2 september 2011. * * * introduction deputy governor matthew elderfield and i thank you for inviting us to appear before the committee today. in addition to some brief remarks about the overall macroeconomic situation, fiscal and other aspects of policy under the eu - imf programme, i would like to use the opportunity of this opening statement to outline our perspective on the problem of mortgage over - indebtedness. economic developments and fiscal policy aggregate domestic economic demand continues to be affected by the unwinding of the imbalances created in the past and the pressing need to continue with the correction of the country ’ s fiscal, banking and competitiveness problems. on the external side, the economy has performed well with positive growth in exports of goods and services. the point has now been reached where the positive impulse to output growth from the external side is broadly offsetting and even beginning to outweigh the remaining drag on growth from domestic developments. the nature of the recovery will be moderate and growth will not be very labour intensive, however, especially in the initial stages. employment has been slow to stabilise and unemployment has only declined due to an increase in outward migration. nevertheless, the labour market situation is deteriorating at a much slower pace than previously and modest employment growth could emerge by the latter part of next year. household incomes remain under downward pressure and the savings rate has risen, keeping domestic consumption subdued. increased savings partly reflect the desire of households to reduce their debt but are also prompted by high levels of uncertainty about the future. the latter, in turn, reflect the extent of the deterioration in the labour market, as well as concern about the precise impact of the planned fiscal adjustment on household finances. at this point, it would be beneficial to reduce uncertainty by both deciding on and announcing, in as much detail as possible, the complete set of changes required to government spending and taxation in order to bring the government ’ s finances convincingly back onto a sound footing. there is no benefit to be gained by delay in this regard and the sooner the government can make more detail available of the composition of the full adjustment package, the better. the planned pace of the adjustment is the minimum that is required to ensure stability and it is vital

evolve to continue protecting consumers in the future. we want to explore how consumer protections can be strengthened to meet the challenges posed by new and different societal preferences as well as technological advances. the aim of the discussion paper is to facilitate a conversation on how consumer protection in financial services should evolve to remain effective. we are asking for your input into the first stage of our review of the consumer protection code. we want any changes to the code to be informed by the experiences and insights of those whom it seeks to protect as well as those it regulates. i am now going to hand you over to derville rowland, our deputy governor for consumer and investor protection. we would then like to hear from you, and we will aim to answer any questions you have. 2 / 2 bis - central bankers'speeches