Brian Lenihan Jnr (Dublin West, Fianna Fail)

I am happy to put on the record the truth of our economic position. The future economic viability of this country is at stake. We are living in uncertain times and are faced with new economic realities. The financial crisis sweeping the world is the worst experienced since 1929. We are living in an economic blizzard that is not uniquely of our making. The difference now is that the globalisation of markets in recent years has meant that the speed and severity of the downturn has been unprecedented. In Ireland, our economy has been hit hard on three fronts by the downturn, namely, the rapid decline in the domestic construction industry, our exposure to the international deterioration as a consequence of our small open economy and the growing euro-sterling differential.

The end-February Exchequer returns published today show that tax revenues in the two months to the end of February are down 24% on the same period in 2008. All of the tax heads are down on the same month in 2008, reflecting continuing weakness in the economy. For the month of February alone, the decline was 31%. On the basis of this emerging trend and without further action, a shortfall in taxes will now occur. The February 2008 return included an amount of capital gains tax receipts that we did not anticipate would be repeated this February. Notwithstanding this fact, there is a real deterioration in income tax and value added tax receipts.

In addition, expenditure pressures are also emerging as a result of higher live register costs. Unchecked, this means a general Government deficit of 9.5% of GDP will be breached this year. The 9.5% limit on GDP must be fundamental in terms of our borrowing requirement for Government current and capital purposes this year. It is a fundamental matter because it already counts as one of the highest levels of borrowing in the EU, paralleled only by the UK. Within the euro zone, it is the highest level of borrowing. While it is correct to say that a number of euro zone member states are drifting well beyond the 3% barrier, none has reached the 9.5% barrier. For this reason, it is of fundamental importance that we stabilise our finances before reforming them progressively.

At its meeting this morning, the Government discussed the emerging position and was strong in its resolve to take the decisions that are necessary to ensure the stabilisation and sustainability of the public finances, which are an essential prerequisite for the renewal of the economy. We decided to announce the further necessary measures in this regard by the end of the month. This will involve the introduction of additional taxation and expenditure measures in 2009 to address the continued deterioration in the public finances and to ensure that the general Government deficit this year does not worsen from the previously forecast 9.5% of GDP. No option can or will be excluded at this stage.

It is disappointing that commentary to date has fixated on whether our measures should be characterised as a budget, a mini-budget or a supplementary budget. No option is being excluded, as that is what the country needs.

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