Taoiseach ‘regrets’ fiscal policy not more restrictive

TAOISEACH Brian Cowen said he “deeply regrets” the problems facing the country as a result of the property crash and financial crisis but did not apologise and insisted nobody saw it coming.

Following the publication of two damning reports that found Government policies had a crucial role in the “homemade” crisis, Mr Cowen attempted to pass on the blame saying decisions were based on domestic and international projections of economic growth.

He said an increase in spending during the boom years was in response to societal demands and that the opposition parties had argued that the Government was not spending enough.

Mr Cowen went a step further and said the two reports “strongly vindicate” the approach being taken by the Government in dealing with the banking and financial crisis.

He told a press conference in Government Buildings that the findings in the two documents “shatter a number of myths” by confirming the need for a bank guarantee, that bank failure would be disastrous for the economy and that Anglo should have been nationalised.

But responding to criticism of fiscal policy at the time he was finance minister, Mr Cowen said this had to be viewed “with the benefit of hindsight” and things would have been done differently “if you knew then what you know now”.

Mr Cowen said he agreed with findings in the report by international experts, Klaus Regling and Max Watson, that stricter tax policies could have cushioned the recession.

“I agree with the assessment in the reports that a more restrictive fiscal policy would have helped in slowing the economy. Hindsight is always clear and obviously we would have taken such a course if we had known of the scale of the property collapse which was facing the country. I deeply regret that,” he said.

Budgets which, according to the report, favoured spending instead of moderating the boom, were delivered “on the basis of the revenues that were available at the time, the projections on which one was basing one’s forecasts, and what the needs of society were at the time,” Mr Cowen said.

He said as late as autumn 2008, the IMF predicted growth of 3% for 2009 which turned out to be a contraction of 9%.

“At the time, it was based on projections and predictions of where the economy was going and we have to acknowledge that,” he said.

“The outcome that we now face is a very challenging one for all our people and I deeply regret that. And there’s no Taoiseach and no politician who would have responsibility during that time who wouldn’t be reflecting that concern or that fact,” he said.

Distancing the Green Party from the past mistakes of its coalition partner, Communications Minister Eamon Ryan said his party “was not in government for the long period in which these failings developed”.