Brian Cowen (Laois-Offaly, Fianna Fail)

I welcome the fact we have a commitment to reduce the Exchequer deficit to 3% by 2013. It is imperative we do this in a way that takes account of the capacity of the economy to bear the burden of the adjustment required at each step of the process over the five-year period. The strategy to eliminate the structural deficit over the medium term has to be credible to financial markets and to our domestic audience.

We are in the middle of a budgetary process that requires us to look at various scenarios to see what impact they will have on a fragile economy this year. We have to take account of that. We will seek to be as close as possible to the 9.5% deficit in the context of what is best for the economy but it is important we reach 3% by 2013. That is our commitment and at every stage of the process as we go through a difficult period this year, we must ensure we take whatever action is required over that period to achieve it. The important point is that, in the context of a recession that compares to the worst recession we have seen in many decades, we have to identify the structural deficit, which has to be addressed and eliminated, because in any part of a recessionary cycle there also will be a deficit that is cyclical.

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