Fitzgerald: 'Economic downturn worst since 1929'

The global economic downturn is the worst financial crisis since the 1929 Wall Street Crash, former Taoiseach Garret FitzGerald claimed today.

The ex-Fine Gael leader, who served in office during the 1980s recession, said the Government faced tough decisions but warned the less-well off should not suffer the full brunt of any cut-backs.

Another former Taoiseach, Albert Reynolds, said the economic situation was unlike anything seen in his lifetime but stressed Government leaders were well able to tackle the problem.

The pair were speaking before a major economic conference attended by Finance Minister Brian Lenihan, who moved to reassure customers of Irish banks their money is safe.

Dr FitzGerald said: “In some respects it (economic climate) was worse in 1981 because borrowing had reached enormous heights.

“At least borrowing is low, so we have room to borrow a certain amount.

“In that respect, things are a bit better. In other respects, from a global situation, this is the worst that we have had since I was three in 1929.”

With global stock markets taking a battering, shares on the Irish Exchange today soared after moves were made to shore up the banking system.

The banning of short-selling by the Financial Regulator and reports that the US government is working on a plan to ease the financial crisis combined to power Irish banking stocks to make gains.

Dr FitzGerald served two terms as Taoiseach between 1981 and 1987, with the infamous economic recession of the decade dominating his period in power.

He said if he was in office now he would not intervene in the housing market or allow the less-well off to take the full brunt of any Government cuts.

“There’s a limited amount you can do,” he said.

“I would not intervene in the housing market. I would try and deal with the less-well off and not have them take the full burden of any cuts which tend to happen in every recession, which I avoided in 1981.

“It’s going to be tough, but I think the primary concern should be the less-well off.”

Mr Reynolds, former Fianna Fáil leader and Taoiseach from 1992 to 1994, added: “We haven’t seen anything like this, not during my lifetime anyway.”

Meanwhile Mr Lenihan attempted to boost confidence in the banking sector by assuring customers their deposits were safe and that the Government would ensure the stability of the country’s financial system.

“The (Financial) Regulator has made clear that our banks have ready access to cash from the European Central Bank, that there are no difficulties in ensuring our banks have adequate funds for depositors, that depositors can be confident that their deposits are safe and secure,” he said.

“Your Government will ensure the stability of our financial system.”