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ESRI economic warning further proof that Government lacks economy competency

14 March, 2008

Sinn Féin spokesperson on Economic Affairs Arthur Morgan TD has said the forecasts from the ESRI that this year the economy is set to grow at its slowest pace for two decades is an indictment of government mismanagement of the economy. Morgan demanded that the Government outline what action it will be taking to improve competitiveness and to ensure public finances are adequate to meet spending demands.

Morgan said, "The situation which we are now facing has not developed over night as the Government would have us believe - for the last five years economic growth has been driven by domestic demand rather than by exports. This was never sustainable but the Government did nothing about it. The Government shamefully allowed the exchequer to become over-reliant on taxes related to consumption and construction.

"While many of us were pointing out that a predicted slow-down in the construction sector would have serious consequences for public finances, Fianna Fáil was proposing a range of unviable tax cuts. If further proof was needed of how unviable those proposals were we only need to look at the fact that the ESRI is now projecting an exchequer deficit of €5.3 billion in 2008 with a further worsening to €7.5 billion in 2009.

"The Minister for Finance failed to make an accurate assessment of the potential impact of a slow down in construction on the tax take and of the increase in unemployment on the social insurance fund. Neither has this Government done anything to ensure alternative employment for those in the construction sector faced with losing their jobs - such action would reduce pressure on the public finances.

"The Government must take some responsibility for where the economy is at now - had more been done to ensure that growth wasn't so heavily based on domestic demand and had action been taken to improve competitiveness the impact of negative global economic developments on the Irish economy would be significantly less.

"Minister for Finance Brian Cowen needs to set out what actions he and the Government will be taking to improve competitiveness and to ensure public finances are adequate to fund public services and social protections." ENDS

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