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Saturday 24 February 2018

We're fighting back but no return to era of greed: Taoiseach

Kenny signals bailout over but it’s not yet the end of austerity

Taoiseach Enda Kenny addressing the nation after the bailout
Taoiseach Enda Kenny addressing the nation after the bailout

Taoiseach Enda Kenny has warned that tough budgets will continue until 2020.

The Government has to stick to the policies of bringing in tough budgets to avoid putting the economic recovery at risk, he told the nation.

In his much-anticipated State of the Nation address, the Taoiseach said that our exit from the three-year EU-IMF bailout sent out a powerful signal that Ireland is "fighting back".

Our sacrifices were paying off -- but he stressed there could be no return to the era of "speculation and greed".

"We are never going back to that culture," he said.

Mr Kenny also made it clear there can be no let-up in the austerity policies, warning "the progress that we have made must not be put at risk. Now is not the time to change our course or direction."

The Government will announce its new medium economic plan later this week, which Mr Kenny said will set out the steps it will take to fix the economy between now and 2020.

Mr Kenny said the plan will have two central pillars -- tight budgetary control and job creation.

He singled out the banks for special mention, saying they would have to become a contributor to the economy rather than being "a huge drain".

He said Ireland cannot continue to borrow to bridge the gap between what the country raises in taxes and what it spends on public services, indicating strict management of the public finances will continue for another six years at least.

"Everyone knows that you can't keep spending more than you are earning.

By 2020, with continued effective management of the public finances, we can eliminate government borrowing and cut public debt by a quarter," he said.

Mr Kenny repeatedly paid tribute to the efforts of the Irish people throughout the crisis.

"I thank you for the part that you have played in Ireland's recovery to date," he said.

He said the tough choices that he and the Government have made since coming to office have been necessary, while acknowledging their impact on families across the country.

"We had to act decisively to show investors, and markets, and our international partners that we were serious about fixing our economic problems. This was tough -- wages and services were cut, and new charges introduced. Many families have also had to face the devastating consequences of unemployment and emigration," he said.

But he cautioned that while exiting the bailout was an important step, the lives of the Irish people will not change overnight.

The emergence of the country from three years of a tough bailout programme sent out a powerful signal internationally -- that Ireland is fighting back, that "the spirit of our people is as strong as ever".

But he continued: "Now is not the time to change our course or direction. While the bailout is over, we must approach the future with that same clarity and decisiveness."

Mr Kenny said the immediate and urgent priority facing the Coalition was to stabilise the economy by tackling the "enormous budget deficit and the banking chaos that we inherited".

But the sacrifices made by people were now making a difference and the country was moving in the right direction.

Mr Kenny's speech focused heavily on jobs, as he pledged to replace the jobs lost in the crisis by 2020 to allow many of those who have been forced to leave Ireland for work to come home.


"By increasing total employment to over two million people by 2020, we can replace all of the jobs that were lost during the crisis with new jobs, offering many of those who have left Ireland the choice to return home," he said.

During his address, Mr Kenny said the Government would seek to remove the barriers to new jobs in key sectors, while overhauling the social welfare system to provide incentives for unemployed people to get back to work.

In an acknowledgement that the bailed-out Irish banks are still not fulfilling their role in society, Mr Kenny said the plan would require them to "become a contributor to the economy, rather than a huge drain on it".

"The banks must do more to deal with mortgage distress and to provide access to credit for small business," he added.

Mr Kenny said the country must continue on its path of fiscal rectitude.

"Now is not the time to change our course or direction. While the bailout is over, we must approach the future with that same clarity and decisiveness," he said.

Mr Kenny said that when they took office, up to 1,600 jobs a week were being lost, compared with the 1,000 jobs a week that are being created now.

"That's progress, but we must build on it," he said.

The new economic strategy will contain commitments to meet the debt reduction targets required under the EU Fiscal Treaty approved by voters last year.

The plan will also say borrowing will no longer be necessary by 2018 and the budget will be balanced in pure cash terms by 2020.

The Medium Term Economic Strategy will also commit to tax cuts within the lifetime of the Government, if economic growth allows.

The relief in the tax burden will be targeted at squeezed middle-income workers, earning between €30,000 and €60,000.

The Coalition is already committed to bringing down the deficit to 3pc of national income by 2015.

Then it will have to achieve a balance in the "structural deficit" by 2018, by getting that figure down to zero.

By Daniel McConnell Political Correspondent

Irish Independent

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