'Clear signs' of stability and growth

THE ECONOMY is showing clear signs of stabilisation, Taoiseach Brian Cowen said yesterday.

Addressing delegates at a Citigroup conference in Dublin, Mr Cowen said Ireland had shown greater flexibility in adjusting rapidly to the financial crisis than other euro-zone economies, adding that significant progress had been made “in turning the corner”.

He pointed out that exchequer returns for December showed that tax receipts had stabilised, while the current account of the Irish balance of payments improved during 2009, which suggested that the economy was “rebalancing”.

However, despite its optimistic tone, the Taoiseach’s address was notably defensive in parts. Economists came under fire for the questionable accuracy of their forecasts.

Mr Cowen recalled that when he became Taoiseach in May 2008, the OECD and IMF were predicting growth of about 3 per cent for the economy in 2009. “How wrong that turned out to be,” he said.

Mr Cowen also spoke of the difficulties he had faced as a result of the “worst economic and financial crisis in a generation”.

Communicating with the public “in the face of understandable anger and worry” on the complex issues that had had to be addressed had been “very difficult”.

“I have certainly never experienced the rapidity of events, the necessity for instant decision-making and the need to take risks in managing the crisis to ensure the country is not overwhelmed by it,” he said.

He stressed repeatedly that the Government has “acted decisively” to tackle the fiscal crisis.

In 2010, he added, an adjustment of €4 billion would be achieved mainly by reducing expenditure but, in the future, revenue-raising measures such as widening the tax base would be used.

He noted that the general consensus among commentators was that the economy would return to positive growth during 2010, but that a full year of growth would not be achieved until next year.

Long-term growth must be based on a more sustainable export-led growth, he said, which required the restoration of our competitive advantage.