Difficult days ahead as living standards set to drop, says Taoiseach

 

TAOISEACH BRIAN Cowen has said Ireland faces a few years in which the standard of living will drop.

Mr Cowen said the economy would face "difficult days" and times when the jobless figures would go up. However, even though people's standard of living will fall things will still be a lot better than they were five, 10 or 15 years ago, he said.

"There is this blanket uniform negativity as if the whole thing has imploded in the sense that it's all an illusion, that it never happened, that the last 10 to 15 years was . . . just an aberration," he said.

Dismissing this analysis, he said that a modern economy had been built, while acknowledging that there was now a need to adapt.

Mr Cowen was being interviewed on The Gerry Ryan Showon RTÉ 2FM where he spoke about the economy, the possibility of technology giant Dell scaling back its large Irish operations, the crisis facing the Irish banks and his plans for economic recovery.

He also said the social partnership model was the correct one to help the Irish economy recover as it was a "problem-solving" model.

The deterioration of the economy in the space of 12 months, he said, was a "turnaround that we have never seen in Irish economic history.

"This is a switcharound within months rather than years. We need a new set of policies and we need changes. These changes will not be painless. There is no silver bullet here."

Mr Cowen maintained that the Government decision in September to guarantee deposits in Irish-based banks to a level of some €400 billion, but without injecting capital at that time, was the "right response" and helped stabilise the market.

On the decision taken over the weekend to spend €5.5 billion to recapitalise the three main indigenous banks, he said: "The markets have continued to look to see how much capital is in our banks.

"Even though we are above all the regulatory requirements, it came to a point where we felt it was timely to use pension fund money which isn't making a whole lot of money for the moment.

Asked if he had faith in the banks, he replied: "I have faith in the boards of the banks to do whatever is necessary in the situation they find themselves in.

"[The Government] will be far more hands-on in having directors in there."

There was a fundamental fracture of the worldwide financial system, he said.