I thank the Chairman for the opportunity to be here today to discuss the summer economic statement. It outlines the broad parameters that will underpin discussions of economic and fiscal policy over the medium term and the main pillars of this approach. In the short term, it sets the framework for discussions on budget 2018 over the coming months.
Turning first to the economic situation, I am greatly encouraged by the latest data confirming the economy grew by 5.1% last year. The positive momentum has continued into this year with annual gross domestic product, GDP, growth of 6.1% recorded in the first quarter. My Department is forecasting national income growth of 4.3% this year and 3.7% next year. Importantly, this is a jobs-rich recovery. We have seen more than 230,000 jobs created since the lowest point of our crisis. As a result, there are now more than 2 million people at work. We are forecasting a continuation of good employment growth over the forecast horizon and on that basis by the end of this decade there will be and should be more people at work in Ireland than ever before. In this context, it is important that we do not make some of the mistakes of the past and that budgetary policy does not contribute to a potential overheating of the economy. The Government is acutely aware of this.
Turning to the public finances, the latest Exchequer returns were very positive. Following a slightly disappointing performance in the first quarter of 2017, tax receipts in the second quarter have been much more robust with cumulative receipts coming in only slightly below target and up 4% year-on-year. We are now well positioned in terms of achieving the overall annual tax target of €50.6 billion for 2017. This provides further evidence that our public finances are being put on a solid footing. A general Government deficit of 0.4% of GDP is projected for this year. In addition, it is important to point out that our fiscal objective for next year is to broadly balance our books, which is to achieve a structural deficit of 0.5% of gross domestic product.
I reiterate my determination to achieve this medium-term budgetary objective next year. We must also be conscious of the increasingly uncertain external environment within which we operate. There is considerable uncertainty related to, for example, Brexit and the future economic policy stance in the United States. It is therefore appropriate to plan for a rainy day. In this context, the Government will maintain a rainy day annual fund with an annual contribution of €500 million per annum beginning in 2019. It is half the size of the contribution originally envisaged, with the difference being used to finance capital investment, which will help us prepare for future challenges. However, as I said last week, the additional allocations will be subject to an assessment of the capacity of the economy to absorb the additional funding at the time.
While the debt ratio has fallen considerably in recent years, this arises from distortions in our gross domestic product data. Last year the CSO published an alternative measurement of the size of the Irish economy, the so-called modified GNI*, which adjusts for these distortions. If this new measure is used to scale our debt, our debt ratio was 106% last year.
This clearly illustrates the need to continue to reduce public debt to improve the resilience of the economy. The Government will continue to reduce the debt to national income ratio until the 60% threshold is achieved and, thereafter, work to a medium-term objective of 55%. In the longer term after this, and once a set of major capital projects has been completed, we will then target a further reduction to 45% of our national income
I will now deal with the issue of fiscal space. For next year, the Department estimates the overall fiscal space amounting to €1.2 billion will be consistent with achieving a balanced budget. Of this, around €700 million will be absorbed by the full year cost of measures implemented this year. Without offsetting measures, this would leave just over €500 million for new measures. This means that overall public spending will be around €60 billion per year. It is crucial that we focus on the totality of expenditure and not just on incremental changes. I take this opportunity to inform the committee I will publish the mid-term expenditure outlook today. This will involve the publication of a set of papers that will be the first output of the comprehensive spending review we have had under way on the €60 billion. I am doing this because it will be increasingly important to focus on the issue of fiscal stance and budgetary stance and not just on the concept of space. We have to ensure budgetary policy is appropriate in supporting good macroeconomic conditions and boosting potential growth. While the short-term prospects are positive, a continuation of robust growth cannot be taken for granted given the challenges we face. The best way to deal with this is to have a sensible fiscal stance and to do our best to support policies that promote jobs and income in our country. This is what the summer economic statement aims to do and it is what I want to do. I look forward to engaging with members.