The Government will "not be found wanting" in making the necessary hard decisions on the economy "no matter how unpalatable", Taoiseach Brian Cowen has warned.
In a speech to an audience of business leader from the North and South in Dublin this evening, Mr Cowen said "nobody will escape" the consequences of managing the economy in a manner that would, as much as possible, reduce the impact of "the most serious global economic circumstances for almost a century".
Speaking at the annual dinner of the CBI-Ibec joint business council, Mr Cowen commented on the rapid deterioration in the public finances and defended the Government's decision to introduce emergency measures this week to guarantee bank deposits.
He said the decision to legislate to protect the banks was not done to "prop up" an ailing system, but to protect the economy. And he said the banks would pay a "substantial fee" for the use of the State's "excellent financial standing".
"We did not take our decisions on the banking sector lightly. There have been those who have criticised our decisions. I understand that. But the intervention was absolutely necessary," he said.
Mr Cowen referred to his first budget speech as minister for finance nearly four years ago, in which he said economic growth was "not an end in itself".
"It was only of benefit if it led to a better society for all. This is what concerns me as a politician. It follows that the difficulties within the financial markets concern me only in so far as they are the bedrock on which the economy is built," he said.
"We need a robust banking system. Protecting it in the manner and on the scale we have done this week is not something government does lightly.
"It is certainly not something that is done as an end in itself. It has to be done in order that we can have a functioning economy. If our financial system is not functioning, activity gradually grinds to a halt," he added.
Mr Cowen told the business leaders that any of them who had been trying to get lines of credit from the banks in recent months and who had found them, in effect, closed for business, should now see a change.
"We did not make the move we made in order to "prop up" an ailing system. We did not support the banks in order to protect the reputations of institutions and individuals who needed protection. We chose this course because we have an economy to protect and to grow. That is what we are responsible for."
Mr Cowen said the legislation did not provide a "free guarantee" for the banks.
"Banks who choose to avail of it will pay a substantial fee for the use of the State's excellent financial standing. That standing has been carefully and painstakingly built by the people of this country and it will not be put at risk," he said.
The Taoiseach said this was "effectively and insurance scheme" which gives lenders and depositors confidence in the country and in the banking system.
"In the event that the insurance given is not called upon, the Government finances will benefit from the levy charged for the guarantee. In the event, that any losses arise from the guarantee scheme, the Government will ensure that they are borne by the banking sector rather than the taxpayer."
Mr Cowen said we faced an "unprecedented financial crisis", much of it "rooted in the excesses of the United States money system". But he said there were major problems across Europe, and Ireland was never going to be immune.
"There has been a rapid slowdown in the global economy arising from this turbulence in global financial markets and the credit squeeze, faltering economic growth in the major economies, exchange rate shifts and the sharp rise in oil prices.
"No one yet knows what the full extent of these adverse developments will be or how quickly stability can be restored to the financial and equity markets worldwide."
Reflecting on today's Exchequer figures, which reveal a deficit of some €9.4 billion, he said: "The rapid deterioration in economic growth that that has occurred, reflects the more challenging international conditions as well as the substantial correction in the property market that we are experiencing."
"This obviously is affecting tax revenues and over the summer months the weakness in receipts has continued at a pace. In particular, the performance of VAT, CGT and stamp duty receipts is disappointing and reflects developments in the property market as well as weaker economic activity.
"The result is we are now facing a €6.5 billion shortfall in tax revenue. Nobody should harbour any illusion that living within our means will be easy. It will force considerable sacrifice on all of us."
Mr Cowen said the scale of the challenge ahead was illustrated by the fact that it would cost every single taxpayer in the country an extra €5,000 to clear the Exchequer deficit as it currently stands.
He said the "rapid decisions" made by the Government this week demonstrate the seriousness of the situation and how decisive action is imperative.