Michael Noonan (Limerick East, Fine Gael)

The verb is currere. It is not a currency unless it flows. Unless money is flowing, it should not be described as a currency. If everyone is saving and paying off their debts, there is no flow. If the nationalised banks do not give credit to small and big businesses there is no flow, no current and no currency. That is the situation the Minister has got himself into.

I will try to be less gloomy and a little helpful. Fine Gael remains committed to reducing the budget deficit to 3% of GDP by 2014, as agreed with the European Commission. We believe that re-opening negotiations at this point with the EU to extend the period of fiscal adjustment beyond 2014 could lead to a further loss of international confidence in the Irish economy in 2011, with disastrous consequences. Ireland is already likely to borrow more than €60 billion over the coming four years - an awful lot of money - pushing our national debt to well over 105% of GDP. Irrespective of the views of the European Union, there is no guarantee that markets would be willing to lend to Ireland the additional resources required if we were to extend the period beyond 2014. I would say to the representatives of the trade union movement, whose views are sincerely held, and to our colleagues in Sinn Féin, whose views are also sincerely held, that to try to extend the target beyond 2014 could bring about a situation where we would not get the money to run the country next year.

We are taking in €30 billion and spending €50 billion. I do not know what the Minister's correction will be next year but if he pulls expenditure back by €4, €5 or €6 billion we will still be borrowing a significant amount. The bond markets are closed because, in the estimation of Irish financial authorities, if they were open we would not get investment. When they re-open in January, it is essential that they lend to us again. If the deadline is extended from 2014 to 2016, for example, there is a danger that Ireland will not get money when the bond markets re-open and instead of an adjustment of €4, €5 or €6 billion, or whatever the Minister has in mind, we will have to go for the whole lot. If we do not get the money we will have to bridge the gap and the gap is between €30 billion and €50 billion. That is a scenario I would not like to be exploring in January. We would have no sovereignty left if that were to take place.

The credibility of any growth path depends on the growth that is likely to take place. This is where the Minister's €15 billion comes in. This morning, the Taoiseach said the expenditure cut of €15 billion was a forecast. He is right. It is not a target; it is a forecast. While Fine Gael agrees to the 3% target we do not agree to the forecast of €15 billion, which is a forecast of the ways and means to get to the 3%. The forecast can shift, depending on what growth figures are put in. The Ministers for Justice and Law Reform and Finance have suggested that the €15 billion expenditure cut is based on an annual growth forecast of 2.75% for the next four years.

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