Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Question 17: To ask the Tánaiste and Minister for Finance his Department's forecast for the expected level of economic growth for the full year of 2008; the way this compares to the forecast he gave in his budget speech in December 2007; the way this compares to the forecast given to the Dublin Chamber of Commerce recently; and if he will make a statement on the matter. [7856/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

My Department's economic forecasts have not changed from those published on budget day, when GDP growth of 3% was projected for this year with GNP growth of 2.8%. With regard to what the Taoiseach said in his recent speech to the Dublin Chamber of Commerce, there is no inconsistency. He was speaking in approximate terms. Furthermore, among economic commentators, the current range for forecasts is from 2% to 4%, with some taking a more pessimistic view and others an optimistic view of the various risks that the Department of Finance identified when it set out its forecasts at budget time.

The more important point that the Taoiseach was making is that the fundamentals of the Irish economy are strong. While we must not underestimate the issues that are facing us, once the current situation is managed correctly we should expect to see growth pick up towards 4% in the coming years. This is the view of most of those who have published forecasts for 2009 as things stand. We are laying the groundwork for future prosperity through the continued prudent management of the economy and public finances, while at the same time making significant additional capital investment under the continued roll-out of the national development plan.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Did I hear the Minister correctly when he said that the Taoiseach spoke at the Dublin Chamber of Commerce in approximate terms about growth? His growth indicator was half a point below what the Minister and his Department had previously indicated. Is this a new language? When there is a dramatic change in the growth forecast, the Taoiseach is speaking in approximate terms. Presumably, however, the Minister speaks in more definitive terms. Is the Minister aware that Davy Stockbrokers today downgraded the growth rate forecast to 2% for the rest of the year?

Is the Minister satisfied with the monuments and milestones he has created so far in this Government as Tánaiste and Minister for Finance? He is heading for the first budget deficit since the mid-1990s. Unemployment is anticipated to grow at the fastest rate since 1980. It is almost back to the days of Charles Haughey and the disasters of 1977. The number of unemployed is projected to grow by in excess of 26,000. We are anticipating, under the Minister's watch, losing 23,000 construction jobs, while tax receipts are falling at the steepest levels since the early 1990s. With regard to the difference in estimate between the Minister and the Taoiseach, what, if anything, have they agreed to do to address the very steep decline in our economic fortunes? The Minister mentioned the election earlier. He promised during the election campaign to keep the boom times going. The boom is obviously over so what alternatives does the Minister have?

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

It is a new line of attack from the Labour Party to suggest that I should have a tighter fiscal policy and no deficits. Perhaps the party would outline, in the course of the next weeks and months, what areas of current and capital expenditure it wishes to cut so we can accommodate its new fiscal stance. I will be glad to hear that. Comparing the challenges currently facing the economy as equivalent to those that faced the economy in 1980 is not only specious but absurd. The fundamentals of the Irish economy are far stronger now and we are in a far better position to withstand international pressures. When global conditions change and currency, financial and equity markets take the tumble they have taken since last autumn, which was after the election and was not predicted by the Deputy or anybody else, we must accommodate those changes as an open economy.

With regard to the growth rate, Davy Stockbrokers are in the lower band of predictions at 2.1% GNP. The predictions are: Central Bank — 3%, the ESRI — 2.3%, EU Commission — 3.5%, OECD — 2.9%, the IMF — 3%, AIB — 2.5%, Bank of Ireland — 4%, Friends First — 3%, Bloxham Stockbrokers — 3%, Goodbody Stockbrokers — 2.3%, National Irish Bank — 3.9% and Ulster Bank — 2.1%. Basically, these are predictions based on certain assumptions such as whether downside risks are realised, to what extent the current problem in the United States deteriorates, for how long that will happen and its impact. It is not correct to suggest that everybody is on the button in this matter. I predicted in my Budget Statement, despite setting out downside risks, a GDP growth rate of 3% for this year and GNP growth of 2.8%. Those predictions are broadly in line with the market consensus. They are not exactly what Davy Stockbrokers predict but there are other predictions that are even more optimistic. We took the median position, which was fair. Who will be right at the end of the day will depend on many things between now and next December.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

I asked the Minister about the difference in forecast between the Minister and the Taoiseach. The Taoiseach's forecast was half a point below the Minister's when he spoke recently to the Dublin Chamber of Commerce. Bearing in mind the steepest declines in tax revenues since the early 1990s, the highest increases in unemployment since the 1980s and the fact that we are now facing a budget deficit, does the Minister have any proposals to address this, particularly the 26,000 additional people who will become unemployed? Most of them will be men losing jobs in the construction industry or from long-term employment in factories and traditional industries in areas throughout the country. There will be between 600 and 700 job losses in Arnotts in Dublin, for example. During the election campaign the Minister said he would keep the boom going, but the boom is gone. Does the Minister have any strategies for addressing the fall-out for people now facing unemployment?

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I have just explained that I reject the Deputy's contention that we are working off the same base as 1980. We are in a far different position. There will be rising unemployment but there will also be rising unemployment in the European and global economies. There will be lower growth rates. We are transitioning to lower medium and long-term growth rates than was the case in the halcyon days of the Celtic tiger. Everybody knew and understood that before, during and after the election. The issue is who is most capable of managing the situation. The Deputy suggests that my fiscal stance is too expansionary. She does not agree with the impetus I have put into the economy of approximately——

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister should concentrate on his views, not mine.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I am giving the Deputy my views.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister should concentrate on answering about what the Government proposes to do.

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Tánaiste without interruption.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The budgetary stance I took, taking into account all of the downside risks, was to provide an impetus into the economy of approximately 1.5% of GNP. I have increased the capital programme by 12% but the Deputy obviously believes that is too much. I await the list of the Deputy's proposals for cutting it and day to day spending. Otherwise, she does not have credibility.