Cowen unveils five-year-plan to overcome recession

A five-year Government blueprint aims to protect the Irish economy from the global recession, the Taoiseach said today.

A five-year Government blueprint aims to protect the Irish economy from the global recession, the Taoiseach said today.

The Cabinet held a special meeting in Farmleigh House to discuss the plan for economic recovery, which is expected to be published before Christmas.

Finance Minister Brian Lenihan yesterday announced a long-expected €10bn capitalisation plan to shore up the banking sector.

The economic plan is believed to contain pro-business proposals on creating jobs across all sectors.

Taoiseach Brian Cowen said today: "Actions are being taken by the Government to ensure that Ireland deals effectively with domestic implications of the current unprecedented global economic difficulties and to promote a successful economic recovery."

Under the recapitalisation plan, funds will be available to firms such as AIB, Anglo-Irish, Irish Life & Permanent and Bank of Ireland who have until January to put forward proposals.

The scheme mirrors a larger version carried out by the British government in recent months to protect the balance sheets of several UK banks and to boost their lending.

Stockmarket shares today rose strongly in Bank of Ireland, Anglo Irish and Irish Life and Permanent but AIB finished slightly lower.

The Department of Finance said the state may use money from the National Pension Reserve Fund for the recapitalisation scheme. Existing shareholders and private investors will also contribute.

Meanwhile the Irish Bank Officials' Association today gave a cautious welcome to the plan but urged the Government not to go down the route of private investment.

Mr Cowen earlier discussed Irish and international economic issues with Senator Chris Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee, who was visiting Dublin.

Mr Cowen's spokesman added: "They discussed the current actions being taken by the US administration, including the financial and automotive sectors, and the likely developments in US policy when the new President and new Congress take office in the New Year."

Senior banking officials are due to appear at the Joint Oireachtas Committee on Finance and the Public Service at Leinster House tomorrow.

In September Ireland became one of the first countries to tackle the global credit crunch by unveiling a €480bn two-year bank guarantee scheme.

The scheme, hastily constructed in late September amid international banking turmoil, covers Irish-owned institutions: Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent and Permanent TSB, Irish Nationwide Building Society and the Educational Building Society.

Other banks later added to the scheme included Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank and Postbank, a joint venture between An Post and Fortis Bank.

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