Taoiseach Brian Cowen has warned the Irish economy will have to be reorganised over the next five years if the prosperity of current and future generations is to be secured.
In an address to an IDA Ireland dinner in Davos, Switzerland tonight, Mr Cowen said there were no “silver bullets” to insulate the country from the effects of an international recession.
“Nevertheless, it is not enough to simply weather the storm of negative international economic factors,” he said.
Mr Cowen said the Government has been working to a plan which will control public spending and reduce Exchequer borrowing over the next five years.
The €2 billion cut in public spending, currently being negotiated with the social partners, was only “the first phase in the process”.
Further adjustments of €15 billion will be required for the five-year period as a whole, he said
The Government also intended to progressively reduce the level of Exchequer borrowing over the next five years in order to reduce the General Government Deficit to below 3 per cent by 2013.
“This will involve a combination of expenditure and taxation measures over the period,” he said.
In his speech, Mr Cowen said Ireland is open economy and highly dependent on exports and therefore could never be immune from the global economic and financial turmoil
The country, he said, was facing the most difficult global economic conditions in 70 years and one which may yet “prove to be the longest and most severe of the post-war period”.
But he insisted that many of the key factors that have transformed the Irish economy in the last two decades will continue to serve the country well.
“Innovation is the key. Ireland must move up the value chain and assert itself not only as an open enterprise economy with a positive environment for Foreign Direct Investment, but also as an open entrepreneurial economy with significant comparative advantages,” he said.
Mr Cowen will tomorrow join other world leaders at a key working session on the global economy.
Other world leaders attending include German Chancellor Angela Merkel, Russian Prime Minister Vladimir Putin, British Prime Minister Gordon Brown and Japanese Prime Minister Taro Aso.
NGO representatives, social entrepreneurs and religious leaders have also been invited to the summit.
Mr Cowen will return to Ireland tomorrow.