Cowen’s regret for Ireland’s crash

Photo: Sam Boal/RollingNews.ie

Former Taoiseach Brian Cowen last week sort of said ‘sorry’ for the crash but claimed credit for Ireland’s recovery

Former Taoiseach Brian Cowen said his biggest regret is the hardship suffered by so many Irish people during the financial and banking crisis which wrecked the country’s economy in 2008, writes Damian Dolan.

Mr Cowen, who was taoiseach and leader of Fianna Fáil when the crash happened, made his remarks at Dublin Castle last week when he was conferred with an honorary law doctorate by the National University of Ireland.

In his speech, he addressed the impact of the recession, defended the actions taken by his government to the crisis and attacked the response of the European Union to Ireland’s economic situation, citing a “lack of solidarity with small countries who were in difficulty”.

Mr Cowen, who called his tenure as Taoiseach an “arduous task”, added: “Europe forced certain countries such as Ireland to implement inappropriate decisions such as protecting international bondholders.”

Emigration

The impact of the recession on the Irish people was austerity measures, cut backs in salaries and jobs, and unemployment, which forced many to emigrate from Ireland in order to find work, and which Mr Cowen called in his speech “the greatest hardship of the recession”.

Two hundred and fifty thousand of Ireland’s two million workforce lost their jobs, with the vast majority of those losses coming in construction and related industries, and in retail.

Mr Cowen put the blame for the crisis down to a “poorly regulated” Banking sector, “Low personal and corporate taxes”, a growth in “incomes and in Ireland‘s population” which resulted in a housing bubble, and an “increase in household and corporate debt”.

In response, Mr Cowen said his government took the “required action” necessary to stabilise the economy, even though those decisions would be unpopular politically.

Hardship

“The greatest hardship of the recession was the loss of employment for so many of our people – something which I deeply regret,” said Mr Cowen.

“Hardworking men and women who ask only for the chance to work to support themselves and their families were denied that opportunity by the cruel reality of an economic downturn…

“The Government knew the required responses would involve great sacrifices from our people and would be very painful on individuals and families.”

Mr Cowen said the Government were also fully aware that the required action “would understandably be more unpopular than almost any policies in recent Irish history and that this threatened the survival of the Government and our hopes of election.”

Those actions included cuts in public expenditure and increases in personal and indirect taxation, although the corporate tax rate of 12.5% remained the same in order to attract foreign investment.

Taoiseach Brian Cowen regret Ireland financial crisis in 2008
Former Taoiseach Berti Ahern and Brian Cowen. Photo: Sam Boal/RollingNews.ie

But Mr Cowen added that “to avoid taking the decisions would mean that future recovery could be put off by decades.”

The Fianna Fáil-Green government paid the price for the economic crisis, collapsing in 2011, but Mr Cowen challenged the suggestion at the time that his government had “no strategy to provide economic recovery”.

“I want to refute that emphatically,” said Mr Cowen. “While a considerable focus of our attention was on stabilising the economy, we also introduced a comprehensive set of policies that laid the foundations for growth returning by 2011 and the exceptional jobs growth we have seen in the last number of years.

Growth

“These policies have continued as a centrepiece of the current government’s policies. The decisive action we took saw an annual return to economic growth by 2011.”

Mr Cowen did go on to concede that the problems “should have been identified earlier and policy should have changed prior to the crisis”.

On his own tenure as Taoiseach Mr Cowen defended his record.

He said: “I was always observant of the principle of collective responsibility in government. I never briefed against a colleague or sought to influence a prospective decision by government through media leaks or otherwise.”

Despite criticising the EU’s response to Ireland’s financial difficulties between 2008-2011, Mr Cowen said the country is still “much better off as an integrated member of this significant and successful economic bloc”.

Great uncertainty

However, he went on to speak of the “great uncertainty” facing Ireland following the UK’s decision to leave, with access to markets being a key issue of the UK’s EU exit deal.

Mr Cowen said: “If this is restricted for certain areas of economic activity such as services or if tariffs are introduced, this will slow growth and investment and will result in higher prices for consumers and damage economic efficiency.

“This would be an unfortunate outcome but as Europe sees labour mobility, capital flows and market access as interlinked, the future is uncertain. Such uncertainty will inevitably impact on investors views on the UK.

“Overall, I am hopeful that a sensible compromise deal will emerge but this is unlikely to be as beneficial for either the UK or Europe as the UK remaining a member of the EU. However, that issue has now been decided by the UK.”


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