Our economy is fundamentally strong, and that will help us withstand the global pressure, writes BRIAN COWEN
AS A small country, Ireland is relatively dependent on the fortunes of the global economy and, after a remarkable period when the performance of our economy caught up with, and indeed surpassed, many of our European neighbours, we are now facing more difficult times. People are paying more at the petrol pump and for their weekly shopping and many people are concerned about the effect of the global downturn on their job prospects.
The situation in Ireland is not unique. The euro area generally is likely to experience significantly lower growth in the coming months. Diverse circumstances including turbulence in global financial markets, higher interest rates, faltering economic growth in the US and other trading partners, exchange rate shifts, and unprecedented rises in energy prices have combined to place our economy under pressure.
The Government and I are fully aware of the difficulties people face and we are resolutely committed to dealing effectively with the impact that these conditions are having on the public finances so that we will be well placed to take advantage of a future recovery in the world economy.
The source of the problem, of course, is not the major concern for people currently facing financial difficulties.
People want to be reassured and to feel confident about the future. I believe that people can take confidence from a number of factors.
For example, our economy is fundamentally strong, and that will help us withstand this global pressure. Economic activity remains at a record level. Substantial investment in education has created a dynamic labour force, which is highly skilled and flexible, and now stands at more than two million - a doubling in two decades. We have invested heavily in the knowledge economy through research and development. Our low tax regime remains attractive for foreign direct investment. But the Government has also put in place welfare supports to assist those most in need and those most at risk in the downturn. We saved while times were good, recording budget surpluses in 10 of the past 11 budgets. We have halved the national debt as a percentage of national income. We have made unprecedented investments in key infrastructure.
Ireland in 2008 is very different to how it was in the dark days of the 1980s. And the credit for that transformation goes to the Irish people. Their vitality, ingenuity and hard work have made Ireland one of the world's most remarkable economic success stories. Irish people deserve all this success and I am determined to do my best to ensure that the citizens of this country continue to prosper.
So, while we must not overstate the difficulties, equally we must not understate the necessity for decisive action. By making the right decisions, we can emerge from the current global difficulties and return to a stable growth rate. We must act responsibly to secure the long-term future of our economy and our people and I am determined to do just that.
We have, for many years now, operated on the basis of engagement within a framework of social partnership. The effectiveness of the decisions is greatly enhanced when they take place in the context of a co-ordinated approach. It is incumbent on all of us to make compromises to ensure that Ireland emerges undamaged from this difficult global environment. But I should be absolutely clear that, within the framework of democratic accountability, I will never abdicate my responsibility to take decisions that are in the best interests of the Irish people.
In taking corrective action, the Government is committed to the following principles:
• We will make every effort to maintain employment. Unemployment in Ireland remains at about half the level it was in 1997. We will continue to emphasise securing high-quality jobs for our citizens.
• We will ensure that we take decisions that are in the long-term interest, not just for short-term gain.
• We will proceed with those capital investments that will have the greatest impact on stimulating the economy and enhancing quality of life but we will pay strict attention to value for money.
• We will prioritise front-line services for current expenditure while achieving greater efficiencies across all services.
• We will examine measures to reduce the cost of doing business in Ireland to stimulate export-led growth and enhance productivity.
• We will explore initiatives to increase competition to enhance consumer value and dampen rising prices.
• We will pay careful attention to those on the margins of society for whom the adverse global conditions are making life difficult.
Yesterday, the Government agreed an important step in implementing these principles, specifically in regard to the appropriate management of the public finances in the face of reduced revenues. After careful deliberation, we have devised a range of measures to limit spending increases.
Spending is still increased compared with 2007 but, through a number of initiatives, such as not implementing pay increases for Government Ministers and senior public servants, we are curbing any excess so as to keep the public finances secure.
Importantly, reductions on planned expenditure are designed so as not to affect front-line services in health and education. I believe they represent a measured and reasonable response to current challenges and I am confident that the Irish people will see that the Government is pursuing a sensible course of action.
Over the past decade, this country has enjoyed extraordinary success built on the hard work and ingenuity of the Irish people. This Government is fully committed to ensuring that progress made during this period is secured and ensuring that we can take advantage of the inevitable upturn in the international economy. While the current circumstances are challenging, I want to be absolutely clear that the Government is determined to take decisive action that is in the best interests of the Irish people.