Friday 22 March 2019

'Mismanagement by FF to blame for the crash' - Enda

Taoiseach Enda Kenny laid the blame for the economic crash firmly at the door of the Fianna Fail-Green Coalition today.

Mr Kenny said tighter management of public spending would have left the public finan- ces in a much stronger position to protect living standards.

"The lion's share of the damage to the Irish economy was the fault of domestic economic mismanagement," he told the Banking Inquiry.

The Taoiseach was answering questions about his time as leader of the opposition during the economic crash.

He said that by 2007 "an uncompetitive, bloated, over- borrowed and distorted Irish economy had been left at the mercy of subsequent inter- national events".

This had been "without the safeguards, institutions and mindset needed to survive and prosper as a small open economy inside the euro area".


He accused the then government of "abandoning the competitive, export-oriented, flexible economic model needed to prosper inside economic and monetary union", a situation that had been bequeathed to the present administration.

Mr Kenny criticised the ability of the finance minister to introduce or extend tax breaks for favoured sectors of the economy, particularly the property and construction sectors.

He also attacked the "excessively close relationship between the Central Bank and the Department of Finance at the time". The Taoiseach told the inquiry that the dreams of hundreds of thousands of families had turned into a nightmare as "stability was replaced by policy recklessness and regulatory failures".

"We have learned the hard way that being part of the euro presents not just opportunities, but huge domestic challenges," he added.

Richard Bruton, who was Fine Gael finance spokesman at the time, told the inquiry that vulnerabilities had been "unnecessarily created", which left Ireland extremely exposed.

Warning voices "did not get much traction" and "criticism was judged to be 'taking down the economy'."

He criticised a planning system that conferred huge benefits on developers, the lack of distance of the Central Bank from the Department of Finance and the weaknesses of the Oireachtas in holding government agencies to account.

The hard lesson from the crash, said Mr Bruton, was the central importance of strong export-oriented sectors supported by a suite of public policies.

Many reforms had been adopted and "better institutions are now in place to protect us from a repeat of such errors".

We need to ensure "constant vigilance, attention and policy discipline" to avoid "any prospect of a repeat of the mistakes that helped create the crisis that we are now emerging from", he said.

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