Brian Cowen (Laois-Offaly, Fianna Fail)

The answer is twofold. Deputy Gilmore omitted the other issue over the course of the year. It was not simply about whether the growth rate was 0%, 0.5% or -0.5% or whether the current budget deficit was 11.9%, 11.5% or 11%. There was also the banking issue, which provided a spike in our current budget deficit for this year. Given what we had to provide for in that regard, the increase in the national debt was of the order of 20%. The increase in the deficit means the promissory note system, on which Opposition finance spokespersons were briefed yesterday, provides for paying over a longer period of time, as in a mortgage situation. That must be dealt with. I do not want to say that this is the sole source of our problems and annoyance, upset and frustration about this exists. However, it is 10% of the repayment we must make next year in respect of the repayment of debt interest.

Regarding the change for the future, the assumptions laid out in the last budget are very clear. The economic outlook is weaker than previously anticipated. The figure taken for last year's budget medium-term projection was within the parameters of various forecasts made by other reputable international and national institutions. It is also important to recognise the impact of consolidation on economic growth and that balance must be struck. The budget framework set for December is broadly in line with projections. As bad as things have been, it is not correct to say that things have got worse. A contraction of 10% in 2009 has been converted to a stabilisation in the economy this year where there has not been a further contraction in the economy. From where we were coming, this was a good performance since we did not contract by the same percentage this year. That happened because we took decisions on spending and other areas that did not meet with universal approval from the House. Can next year and the years after be better? Can we have an economy that can grow in the context of this consolidation? We must get the balance right between a measure of consolidation and ensuring the economy can grow through sectors of the economy where there was already growth this year. There are areas of the economy growing but this is not sufficient to overcome the contraction in areas like construction and retail. I understand the Opposition parties' predilection for rhetorical phrases but they should not suggest that we are in a catastrophic situation when we have gone from -10% to 0% and consolidating. Difficult decisions must be taken and there are no soft options. The level of consolidation will be greater than previously proposed for the reasons given, including weaker growth and higher borrowing costs in the main.

Structural policy is also an issue. We must change our policies because if we continue on a no policy change basis, we will be in an unsustainable situation. In ordinary terms that people understand, if one is spending €50 and only taking in €31 or €32 the situation cannot continue year on year or month on month.

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