Micheál Martin (Cork South Central, Fianna Fail)

Since credit markets around the world seized up last August, we have seen unprecedented turmoil in financial markets, rising unemployment and increased economic uncertainty. In Europe, in the Americas, in Asia, economic growth has stalled or is in decline. Referring to lay-offs by multinational firms around the world, a British newspaper yesterday carried the headline "More woe as 72,500 jobs axed in one day". In the United States, 2.5 million jobs were lost in 2008. Of these, over half a million were lost in December alone. In Singapore, the Government has cut its original growth forecast for 2009 to between -5% and -2%. Japan's trade surplus plunged by 50% in 2008 as the yen rose in value and demand in international markets weakened.

As growth has stalled around the world, unemployment rates have gone up and Government finances have deteriorated. These are common stories and have their origin in common difficulties. Most of our major trading partners are in a recession. Global trade flows are slowing. The decline in value of other currencies, especially of sterling, has created significant difficulties. These external realities cannot be ignored. The problem is global and the solution must also be found in a global context. The European Union will be fundamental to defining a global response to the crisis. The meeting of the G20 Group in London in April will have an important role to play in looking at a co-ordinated international response.

We would do ourselves a disservice if we do not recognise the strengths as well as the difficulties in our current situation. We have a low level of public debt. Our debt to GDP ratio stands at 41%. We have 2 million people at work, which is over 600,000 more than a decade ago. Our productivity levels are relatively high. We have a strong entrepreneurial culture and Government policies that support this. Membership of the EU provides access to an internal market of almost 500 million people, while membership of the euro ensures a stable currency. We remain a high income country by international standards with strong underlying growth potential.

We need to remind ourselves that much of the spadework for this country's recent development was carried out in difficult economic times. We need to bear in mind that a world in recession is not a world without opportunities. This crisis has had a global impact. Its pace and characteristics have reflected the local circumstances of each country. While Ireland is geographically an island, economically it is part of an integrated global economy. Our economic growth over the past two decades has resulted from our increasing willingness to engage with the global economy. Much can and will be done at national level to address the challenges posed by the international economic environment, the imbalances in the domestic economy and the loss in competitiveness.

Faced with unprecedented developments in the public finances, the Government took steps in mid-2008 to address the emerging budgetary pressures. The date of the 2009 Budget Statement was brought forward. More recently, a group was established to examine ways of further curtailing public expenditure and public service numbers. The social partners have been seeking to develop a consensus on the way forward. The Government will restore balance to the public finances by, inter alia, reducing and prioritising current expenditure and adjusting taxation levels to reflect the changed realities. Immediate action is required. The Government has given a commitment to make expenditure savings of up to €2 billion, or 1% of GDP, in 2009. Its work with the social partners in that regard is ongoing.

Since this crisis emerged, the Government has acted decisively to safeguard the Irish banking system. In September 2008, it guaranteed retail, wholesale and dated-term debt and secured borrowings and the inter-bank deposits of domestic credit institutions. In October of that year, the guarantee scheme was made available to certain banking subsidiaries in Ireland. In December, the Government decided to recapitalise certain credit institutions. In January of this year, the Government took steps to take Anglo Irish Bank into public ownership. We have demonstrated we will do what is needed to ensure the fundamental stability of the Irish financial system.

The Government is committed to maintaining and prioritising the public capital programme. Approximately 5% of national income is being invested in capital projects. This is one of the most effective ways of stimulating the economy. In light of our infrastructural deficit, this investment will generate significant returns in terms of enhanced infrastructural capacity and future improvements in living standards. The Government is keen to emphasise capital works that are labour-intensive. Along with addressing the deterioration in the public finances and seeking to improve the competitiveness of the economy, the Government is focused on developing the medium and long-term potential of this country. While the external environment is difficult, we are looking at those areas in which our actions have put us in a position to seize the opportunities that exist and prepare for the recovery that will come in international markets.

On 18 December last, the Government launched its economic renewal framework, which outlines the priorities and actions that are required. A central part of the framework is its emphasis on building on the previously high levels of investment in education and the knowledge economy. It contains important initiatives to foster innovation and develop the research and development capacity of companies operating here. The key elements of this plan include strong supports for start-up companies, which will provide the employment of the future, enhanced research and development tax arrangements, details of infrastructural projects and the basis of the development of a green economy. This country's research and development capacity has been transformed over the last ten years. That will help us to develop and sustain new employment in the future. Our continued engagement at the heart of the European Union will be an essential aspect of this country's economic recovery and further development. We have the ability to work together and with others on the road to sustainable economic renewal.

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