Gov’t Implements Recession Plan

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Gov’t Implements Recession Plan

July 16, 2008

By Paddy Clancy

TANAISTE (Deputy Prime Minister) Mary Coughlan has defended the government’s plans to stave off recession which Taoiseach (Prime Minister) Brian Cowen has said will include public spending cutbacks of almost $717 million during the remainder of 2008.

The savings measures will include not implementing ministerial pay increases.

Coughlan said it would be “a fatal mistake” to follow the advice of commentators who believe Ireland now faces the same challenge as in the eighties.

“The economy is profoundly different now,” Coughlan said. “Our responses must be imaginative and creative and not based on old remedies.”

Ministers, in responding to concerns about the downturn in the economy, have pointedly refrained from using the word “recession,” preferring instead to talk of a “slowdown” in the boom that was the Celtic Tiger.

Coughlan, who is also minister for enterprise, trade and employment, stuck rigidly to the official line when she said the “corrective measures” that will be taken by the government are a measured response, with Finance Minister Brian Lenihan already indicating he will strongly resist the temptation to borrow excessively, as was called for in some quarters.

“Remember, we have had a decade of extraordinary levels of growth. It was as if Ireland’s pent up potential was unleashed,” Coughlan said.

She said the “dramatic expansion” of the Celtic Tiger era had now fallen back to more normal levels, but the economy continued to be strong and dynamic with public debt down from 53% of GDP in 1998 to 25% at the end of 2007, 14 % in net debt terms.

Coughlan added, “We have very flexible markets. We have a low burden of taxation. And we have over two million at work. Now is not the time to fight old battles. We must ensure that the economic challenges that lie ahead are met with fresh, responsive policies.”

Her speech, just days after the Dail (Parliament) disbanded for the summer, coincided with the largest number of High Court applications from the banks for home repossessions so far this year.

Both Irish and foreign lenders filed cases for “possession orders,” where loans had fallen into arrears. Judge Elizabeth Dunne granted eight repossessions in one day early this week.

In the past, Irish banks have been hesitant to go down the route of repossession, due to fears of poor public relations as a result.

On other fronts, evidence of a “recession” rather than the government’s preferred “correction” was underlined with figures showing soaring unemployment. Olwyn Enright, Fine Gael’s spokeswoman on social and family affairs, said people coming to her office were worried they would not be able to meet their mortgage repayments after one, or even both, wage earners lost their jobs.

Enright said that in her local welfare office in Tullamore, Co. Offaly -– also Cowen’s constituency — an average of 1,000 applications for various supplements each week has now soared to 2,400.

The Small Firms Association has demanded the minimum wage be cut by $1.6 dollars, claiming the $13.77 rate — the second highest in Europe after Luxembourg — was contributing to youth unemployment and to Ireland’s lack of competitiveness.

Adding to the economic turmoil are announcements in the past week that electricity bills are to increase by almost a fifth within three weeks.

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