THE TAOISEACH Brian Cowen defended the Government’s handling of the economy during sharp exchanges with Labour leader Eamon Gilmore.

“We have been open, honest and transparent in our budgetary policy and have outlined to the people that the steps we are taking are necessary,” said Mr Cowen.

“I do not enjoy taking these steps, but they are necessary to get the country back to growth so that we will be ready when the upturn comes.”

Eamon Gilmore said that the Economic and Social Research Institute (ESRI) report was outlining that “the economic recession in Ireland is the worst for any developed country since the Great Depression of the 1930s”.

By the end of next year, almost one in five people in the workforce would be out of work.

“Does the Taoiseach believe that what is happening to our economy does not have anything to do with the way in which Fianna Fáil has mismanaged it in recent times?

“Does he still believe it has nothing to do with him and that it is something which has appeared like the Mexican swine flu – out of the blue and having nothing to do with the way the Government puffed the property bubble and did not face up to the problems in the economy?”

Mr Cowen said that Mr Gilmore could make all the contentions he liked, even if the facts were different. “As Taoiseach of this country, I accept fully, and am acutely aware, that people are losing jobs. Of course, I am aware of that.”

Mr Cowen said that the ESRI accepted that the corrective action the Government was taking was the right thing to do despite, unfortunately, its very severe short-term effects.

With the economy contracting by 8 per cent this year, unemployment was growing.

“We have factored in a projected 15 per cent or 16 per cent unemployment rate for this year and next year,” said Mr Cowen.

“Is that complacency on my part? Of course, it is not. It is a fact with which we must deal. The ESRI is saying that unless this action is taken the prospects for growth will not reappear.”

The problem for Ireland, as a small open economy dependent for a standard of living on global demand, was that there was a global recession.

“Singapore, Korea and all the famous Asian tiger economies are contracting by anything from 8 per cent to more than 10 per cent this year,” he added.

“This is no comfort to us in Ireland, but it is an indication of the global nature of the crisis and of the fact that the only way we can return to growth is by being more competitive and taking down our costs.”

Mr Cowen said that gas prices would come down by 12 per cent, and electricity prices by 10 per cent on May 1st.

“Those facts are clear. The ESRI has budgeted for a steeper drop in the cost of living this year than the Government has done,” he added.

“We budgeted for a drop of 4 per cent and it says the figure will be 4.6 per cent.”

Mr Cowen said they must help, to the greatest possible extent, those who were losing jobs or who could not find work.

“That is what we are doing and will continue to do so,” Mr Cowen added.