Brian Cowen (Laois-Offaly, Fianna Fail)

There is evidence that there will be some reduction in the residential housing output and, therefore, less employment in the construction sector. However, as far as construction industry forecasts are concerned, there is still activity in commercial property, house renovation and the increased impact of extra investment in the Government's capital investment programme. There are some compensating factors. The construction industry is not made up solely of the new house residential market, important as that is.

Over the past decade, the number of people employed in the construction industry has doubled. With slower growth rates this year, the level of activity will be lower than the high base of 70,000 last year. We have made an assumption of a reduction of 25%, down to 55,000 units. We must wait and see how it pans out. This also assumes no change in interest rates. I cannot speculate on what will happen in respect of interest rates in the euro area. It would improper of me to do so, since it is a matter for the European Central Bank. Given the reduction in interest rates in the US, there is a possibility of an interest rate cut here. It is speculative and I do not suggest whether it will happen. The ECB has always emphasised price stability as the main mandate under the Stability and Growth Pact.

Any major turbulence in equity markets is unwanted and unwelcome, but these markets often exhibit short-term volatility. The impact should not be over-exaggerated. It is important to bear in mind that share prices go up and down all the time but the underlying real economy remains the same and we must focus on this aspect.

As a small, globally integrated economy with considerable exposure to the US economy, Ireland cannot be immune to external economic developments. The greater than normal level of uncertainty that characterised the global economy was identified as a key risk in my recent Budget Statement. While we can exert no influence over external developments, we can ensure our economy can absorb external shocks in an efficient manner. It is important to stress that the fundamentals of the economy remain strong. Therefore, we must address it from a position of relative strength.

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