GROWING GLOBAL confidence is emerging that Ireland can pull out of the economic crisis, Taoiseach Brian Cowen has said following a meeting of European Union leaders.
“We still have a way to go but people are getting a sense that we are on top of it, internally and externally. The intangible factor that we have to promote is confidence,” he said.
“The crisis is stabilising across Europe. We are at the preliminary, but fragile stages of recovery,” he said, though he added that the “situation is not even across Europe” with many EU leaders deeply concerned about unemployment.
He welcomed the declaration by European commissioner Joaquín Almunia on Thursday that the Government’s Budget “demonstrated our continued commitment to implementing a . . . credible fiscal policy in these challenging times”.
EU colleagues had raised the Budget with him on the margins of Thursday night’s meeting: “They all knew about it. They all had a detailed ‘take’ on it. They all remarked, in fact those who spoke to me about it . . . were very interested in what we have done,” he said.
Ireland’s membership of the single currency has been critical to the recovery effort he said. “What we need to incorporate into our discussions at home about Ireland and our economic prospects is to recognise that we are part of a wider euro area and that the question of our fiscal and budgetary policy is anchored in the Stability and Growth Pact which has obligations as members of the euro area to consolidate our public finances.
“That is the deal that we have in becoming members of the euro area. Too often, it seems to me that our discussions are in a context that is not simply parochial. We all need to understand that we are part of a bigger operation and that that operation in terms of the European institutions has been fundamental in our ability to cope and, secondly, to move out of recession,” he said.
“The contraction in the economy this year was 7.5 per cent. That was a very serious contraction in a very short period of time for a country that had been at the top of the class, with very low debt, in respect of employment, in respect of investment, jobs. We saw ourselves in an 18-month cycle in a totally different position, and that has been very difficult for everybody to go through. We have to close the gap between what we spend and what we are earning to make our way in the world. It is important to point out that Ireland is competing in the world . . . but there are expenditure patterns . . . that we need to deal with and we are going to deal with that over time.”
He rejected charges made by the Opposition that the Government had been slow to react to the crisis. He pointed out that the actions occurred after he took over as Taoiseach in mid-2008.
“From the time that this new administration took office in the summer of 2008 we made an adjustment immediately then of a billion,” Mr Cowen said, adding that further cutbacks and extra taxes were imposed since.
One-third of the €3 billion savings needed in next year’s budget will come from the capital programme, but he insisted it still left Ireland with capital investment that “is the largest in Europe”.
“But let’s jump our hurdles as we go along. There were three fences that were considerable and we have done them: Lisbon, Nama and a Budget. We have done those three things and we can now look to 2010 . . .”