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Cowen's first test as gloom deepens

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Brushing up: Brian Cowen at Leinster House yesterday where he formally put his name forward for
the leadership of Fianna Fail

Brushing up: Brian Cowen at Leinster House yesterday where he formally put his name forward for the leadership of Fianna Fail

Brushing up: Brian Cowen at Leinster House yesterday where he formally put his name forward for the leadership of Fianna Fail

BRIAN Cowen will inherit a dramatically worsening economic situation as he takes over the leadership of the country from Bertie Ahern.

Mr Cowen formally announced his candidacy for the Fianna Fail leadership yesterday and immediately pledged to focus on improving public services.

But the Tanaiste, along with his successor as Minister for Finance, will face a major test to steer the economy through ever more stormy waters.

A raft of new economic indicators yesterday made grim reading for the Taoiseach-elect.

They forecast that the budget deficit will hit €6bn, economic growth (GDP) will be less than half that of last year, and unemployment will rise to 6pc this year

The Central Bank also said the Government would not meet the targets set out by Mr Cowen in last December's Budget, as the slowing economy hits tax revenues.

Meanwhile, the latest Live Register figures show the fastest three-month rise in unemployment since 1975, with large numbers of women joining the dole queues.

Analysts said this was the first major indicator of joblessness spreading from the construction industry to other sectors.

The worsening economic environment means Mr Cowen now needs to be extremely careful in his choice of Finance Minister.

The odds were slashed on Brian Lenihan to pip Micheal Martin to the post after the Justice Minister nominated Mr Cowen for the leadership.

Mary Coughlan's prospects of being appointed as Tanaiste were also enhanced after she was chosen by Mr Cowen to second his nomination.

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Mr Cowen played down speculation that this meant the pair were his favoured candidates for elevation.

"I wouldn't place too much significance on it. They are two of the friends and colleagues that I have in the party. We are all representing our constituencies. I'm not saying I picked the first two that came out of the phone book," he said.

Responding to the economic figures, Mr Cowen said he agreed with former EU Commissioner Peter Sutherland who said the country needed to "go easy on the crisis talk".

"It is a fair point, because market-makers pick up these things all the time. We have to keep our nerve and work through this part of the cycle, within the parameters that are set. From my point of view it is terribly important to keep a steady course."

Mr Cowen made it clear that improvements in the delivery of public services would be top of his agenda.

He said he wanted to see the public services reformed "with the citizen at its centre".

"I think it's very important that we demonstrate that commitment to public service reform in terms of the people who use those services.

"Public service reform is often perceived as an attack. Quite the opposite. We are operating with limited resources and we have to make the best of what we have," he said.

Later this month, the Government will publish a major report examining the public sector, which is expected to be critical of existing services and make recommendations on how to improve it.

"I look forward to leading a Government that will work with others in making progress in this area," he said.

"The status quo in relation to all our public service is not really sustainable. It's clear that we have to change the way that we do things".

The Tanaiste will be the only nomination for Fianna Fail leader when nominations close today at 2pm.

His position will be ratified on Wednesday morning at a special meeting of the Fianna Fail parliamentary party. He will become Taoiseach on May 7, after Mr Ahern stands down.

Mr Cowen indicated he did discuss Mr Ahern's position when he spoke with the Taoiseach last Thursday week, but did not make any recommendations about resigning.

Turbulence

"I rang him and said we had to have a chat. There was a lot of turbulence in the financial markets. There were a lot of issues to be discussed and for us to get reacquainted with.

"We had a discussion generally about things, how we would proceed. He indicated to me that he was reflecting on matters. I left him time and space to do that," he said.

The Tanaiste said that over the weekend, Mr Ahern was considering the position.

"And I respect the conclusion that he came to. I know that his decision was about putting the Government and the party's interests above his own, and I respect him a lot for it. He showed a lot of class," he said.


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