Gilmore: Bank guarantee was a disastrous decision

Tánaiste Eamon Gilmore has reacted angrily to Micheál Martin’s assertion that the bank guarantee was the “least worst option” available to the former government in 2008.

The Labour leader, who will speak to the UN General Assembly later this evening during his fourth day of engagements in New York, slammed what he described as a “disastrous decision”.

Mr Gilmore was speaking to the media at the Irish Consulate in Manhattan after an IDA/Enterprise Ireland business breakfast where he announced details of next weekend’s Global Irish Economic Forum in Dublin Castle.

Quite animated at times when reflecting on Ireland’s “torrid time” over the last five years, the minister reiterated his optimism in the country’s recovery.

“The bank guarantee was a mistake,” the Tánaiste said. “It was a mistake that compounded the banking and economic problem that was coming our way at that stage.”

He continued: “It was the bank guarantee and the taking on of the entire liability for the banking system that put the State into a situation where it ended up without anybody in the financial markets willing to lend us a penny. It plunged us into an IMF programme, even looking back on it now I think it is hard for some people to fully appreciate this. The state was heading for bankruptcy…

“What happens when a state can’t pay its obligations? Can’t pay staff, salaries to its employees, can’t pay pensions to people who are in need of them and simply cannot pay its way. That is what happened.”

He added: “We are seeing indications of a recovery. I think we have to ensure that that recovery is not put at risk. It is still relatively fragile but we are at last beginning to see a turn.”