TAOISEACH BERTIE Ahern's sober assessment that Ireland will not fully escape the effects of growing problems in the US economy was made during a "doorstep" or "huddle" interview with reporters in Dublin yesterday.
Mr Ahern arrived at the East Point Business Park in Dublin at lunchtime yesterday to open Chase Paymentech's European headquarters. As he entered, he fielded a number of questions from reporters.
He was asked for his response to figures published by the Central Statistics Office last Friday which showed that unemployment had risen to 5.2 per cent last month, the highest figure for eight years.
Mr Ahern said the Government needed to continue generating growth and jobs, such as the Chase facility he was about to open. He also said that the Government needed to stimulate confidence in every industry.
But beginning what turned out to be a very sanguine assessment of the economic situation, Mr Ahern said the Government has always taken the view that the downturn in residential construction was going to have a knock-on effect on the economy.
Nor did he anticipate a bounce-back in the residential housing market, at least in the short term.
"Every 10,000 houses less that is built knocks 1 per cent off growth and that takes out a fair bit of [the employment figures]," he said.
"That's the rule of thumb. It also removes a considerable amount of revenue [ from the economy] as well."
Unprompted, Mr Ahern then widened his assessment to the international situation. He said, having watched the international scene, that huge companies, including major reinsurance companies, were now finding themselves in difficulty in the United States.
"It seems to me - and from talking to people generally - those that were saying that the subprime rate would wash out of the system by last Christmas have been a long way off the mark," he said.
"This week in the United States, it seems that they are in for serious problems in a huge range of companies. And that's having a knock-on effect on the world economy.
"And we won't escape that. What we have to try to do is keep up the growth rates. Employment is still being generated.
"It's going to be a hard year and we need to keep working hard at it," he added.