The Department of Finance has revised its growth forecast for this year from minus 1.3 per cent in the last budget to a positive increase of 1 per cent, Minister for Finance Brian Lenihan announced tonight.
He said that Ireland had now jumped to the top of the growth league in the EU according to the latest Eurostat figures released yesterday.
Speaking in the Dáil in response to a Fine Gael motion critical of the Government’s economic record Mr Lenihan said the latest figures showed that the Opposition was out of touch with reality.
“It is, of course important to keep this in perspective given the severity of the downturn this country has experienced over the last two years. It is too early for the hallelujah chorus. But can I equally suggest that the dirge that is the Fine Gael motion here is distinctly out of tune with the reality of what is happening in our economy.”
Mr Lenihan said that in his budget last December he had outlined that the worst of the recession was over. Last week the Central Statistics Office had confirmed this was the case.
The Minister said GDP increased by 2.7 per cent in the first quarter, which was the fastest pace of increase in the EU.
“As a result, my Department has this evening revised its budget day forecast for GDP growth this year from minus 1.3 per cent to positive growth of 1 per cent. That deputies, is the tangible evidence that the economic plan that the party opposite wants us to abandon, is indeed bearing fruit,” said Mr Lenihan.
He said the driving force of this growth was exports and it was true that GNP was still expected to contract by 0.75 per cent.
“But that too is an improvement of almost 1 per cent on the budget day forecast. Our plan is working: we must stick to it,” added the Minister.
Mr Lenihan said that while unemployment was unacceptably high he rejected the suggestion that the Government did not have an employment strategy and everybody recognised the difficulties in the labour market and the hardship this was causing.
“But the best jobs strategy is to continue on the path of sustainable growth. We need to continue to improve our competitiveness. We need to maintain the stability we have brought to our public finances. And we need a functioning banking system.”
The Minister said jobs were at the centre of this Government’s economic strategy and it had been pro-active in protecting employment and in creating new jobs. There were nearly 1.9 million people at work today which was half a million more than in 1997.
“Talking about creating jobs without addressing the more difficult and less popular issues of competitiveness and fiscal stability is just vacuous. Businesses will not prosper unless we win market share for our goods and services. Yet every measure we have taken to regain our competitiveness over the last two years has been opposed tooth and nail on the floor of this House. There is no rigour, no serious intent in the economic policies of the opposition. It is all just part of the political game.”
Mr Lenihan said the public finances were stabilising but there were many challenges ahead and next year €3 billion in savings would have to be found.
“The Government has already embarked on its examination of how this can be done. I look forward to the hearing the views of the other parties on this matter.”