The 26-County government, facing an unprecedented budget deficit, has brought forward its annual economic policy statement by two months amid heavy criticism of its failure to act over a looming meltdown in the Irish economy.
The 2009 budget speech, in which economic policy for the year is largely set, is now to be held on October 14th.
Opposition parties have railed against the Fianna-Fail led coalition government for squandering and mismanaging the ‘Celtic Tiger’ economic boom years.
Evidence has mounted in recent weeks that the Irish economy is in a sharply downward spiral -- unemployment increased again last month to over 6%, a level not seen for almost ten years, with jobless numbers over 50% higher than this time last year. Irish growth is expected to hit a 17-year low of 1.8 pct in 2008, according to official forecasts.
Minister for Finance Brian Lenihan is said to be preparing drastic measures to halt the slide. The Minister has said he plans to borrow massively, breaching EU guidelines, to counter a shock five billion Euro budget deficit revealed this week. It will also act to support Fianna Fail’s party’s favoured construction industry, which has been contracting rapidly over the past twelve months.
Mr Lenihan said that taking decisive action now was critical to future sustainable growth. He described the financial and fiscal position now facing his government as the most challenging since Ray MacSharry was minister for finance two decades ago -- but claimed the state could still be optimistic.
He said that circumstances were not the same as in 1987 when Mr MacSharry had to face high debt, high tax and unemployment. “We face it with a million more jobs, a healthy debt position and a tax situation that is one of the lowest in Europe but the challenge is similar; to manage the public finances,” the Minister said.
Fine Gael deputy leader and finance spokesman Richard Bruton said the budget decision showed that the coalition government had finally woken up to the scale of the crisis facing the economy.
“This week’s exchequer figures and the unprecedented rise in the live register has prompted a belated response from Fianna Fail. But the Government has squandered valuable time and sabotaged Ireland’s ability to weather the economic downturn,” he said.
Mr Bruton maintained the announcement was designed to fill the publicity cycle.
“Fianna Fail only has itself to blame for this debacle. Fine Gael has been warning for years that the Government’s over reliance on a debt-fuelled housing boom was unsustainable,” he added.
Labour’s finance spokeswoman Joan Burton said yesterday’s dreadful unemployment figures coupled with the disastrous exchequer returns appeared to have finally roused the Government from its summer slumber.
“The Dail must now be recalled to meet next week for an on-the-record debate on the nation’s finances and what the Government must do to restore financial credibility,” she said.
Sinn Féin MEP Mary-Lou McDonald said the 26 Counties was in “the throes of an unprecedented public finance crisis of the government’s own making”, and urged Taoiseach Brian Cowen to be more visible in dealing with the economic situation.
Ms McDonald called for anti-inflation measures to be introduced, and said the cabinet must make sure Ireland’s low-paid workers are not made to “carry the can for the government’s incompetence”.
Speaking after the party’s two-day strategy meeting on economic policy held in Howth last week, she said Sinn Féin would be making detailed, costed, concrete submissions for the management of public finances, and that the strategy will include measures to stabilise and stimulate the economy.
It’s also setting up a committee to monitor the effect of government cutbacks on public services.