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Government policies to blame for 'grave outlook'

THE Opposition rounded on the Government's economic policy last night as recession is to hit for the first time since 1986.

The ESRI report paints "a grave picture" of the Irish economy, Labour leader Joan Burton warned last night.

She said the public could expect living standards to fall, while "most worryingly", unemployment is forecast to increase to 7pc in 2009.

"This is not the result of international factors," she said. "The dominant influence is the collapse in the house building sector -- a boom-bust that was very much of the Government's own making. That the bust should come now, at a time of international economic difficulties, only reinforces the error."

Fine Gael labour affairs spokesman Damian English said: "Fianna Fail, and Brian Cowen in particular, should have used the past 10 years to lay the foundation for future growth and prepare Ireland for the inevitable downturn.

"They did neither.

"It is vital the Government embarks on the process of restoring our competitiveness."

The measures to be taken must involve controlling public spending, meaningful public sector reform, wage moderation for workers, and ongoing investment in infrastructure and education, he said.

Ms Burton added it was time for the Government to acknowledge the scale of the problem, and to "act accordingly".

It has been obvious for some time that the budget figures presented last December are redundant, she said.

"A new set of budget forecasts and a clear statement of budgetary policy for the medium-term is now required."

While the public finances must be returned to a sustainable path, moving too quickly could make matters worse, she added.

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"What is needed is an orderly correction that reflects the 'once-off' nature of the construction downturn.

"The Government should avoid long-term damage to our economy that would result from delaying the National Development Plan," she added.

But labour market policy was a different matter, she said. Her party had for months been calling on the Government to address the needs of people losing their jobs in construction and manufacturing.

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