THE RECENT surge in borrowing costs suggests there is a “concerted attack” on eurozone countries, according to Minister for Finance Brian Lenihan.
Mr Lenihan said in Dublin yesterday that the Government “will do everything that is essential to protect the common currency and put our own economic house in order”.
The national accounts figures published on Thursday, which showed a fresh contraction of the economy in the second quarter, were “weaker than expected” but also indicated that the economy was “stabilising”, he said.
“It is important as a confidence-building measure that our successes are reported as faithfully as our problems at this time.”
However, Mr Lenihan acknowledged there was “a climate of fear” – fear relating to the impact of markets on the real economy, fear about the loss of jobs and fear about the stability of the banks.
He said the stabilising of Ireland’s gross national product (GNP), which fell 0.3 per cent in the second quarter, was “a remarkable turnaround” that was important to bring to the attention of potential investors in the country.
“Tax revenues are stabilising, public expenditures are under control and our budget deficit will shrink next year. The recovery is still at a tentative stage and is likely to be uneven.”
Mr Lenihan also said it was “too early” to signal whether a tougher budget was required for next year.
Irish borrowing costs hit a new high of 6.546 per cent yesterday and have been rising for the last month. The premium investors demand to hold 10-year Irish bonds rather than German bunds rose to a new euro lifetime high of 451 basis points.
At the National College of Ireland yesterday, David Begg, general secretary of the Irish Congress of Trade Unions, warned the economy "could go the way of the Titanic" unless a new course was steered.
Mr Begg said the existing model of economic growth was “no longer fit for purpose” and Ireland must take “the high road” to industrial development.
“If we take another €3 billion, or perhaps more, out of the economy in December’s budget, we will kill the possibility of growth reigniting.”
Meanwhile, enterprise and science policy advisory board Forfás published a number of recommendations reflecting concerns raised by the business sector.
In its report Making It Happen: Growing Enterprise for Ireland, Forfás recommends structured and accredited work placements should be further developed within third-level programmes; that bonus points for college entry should be awarded for higher-level maths; that more funding should be allocated for in-employment training; and that efforts should be made to minimise commercial rates and local authority charges, with the "user pays" principle implemented.
Its range of recommendations also includes reformation of bankruptcy law, expansion of certain Enterprise Ireland funds and the reduction of regulation costs by 25 per cent by 2012.
