Minister for Finance Brian Cowen yesterday welcomed comments on the Irish by ECB president Jean-Claude Trichet as "a very significant endorsement of this Government's economic and budgetary policies".
In an interview with The Irish Times, Mr Trichet said Ireland was an example of how countries that embrace reform could achieve strong growth. In response to a question on whether the euro was responsible for Europe's disappointing growth performance, he said: "Those who have being doing these reforms have been magnificent performers. I quote Ireland. Has growth been disappointing in Ireland?"
Mr Cowen quoted Mr Trichet's remarks as a "very significant endorsement of this Government's economic and budgetary policies". Mr Cowen pointed to low rates of income tax as key factors behind Ireland's growth performance.
"I would point to the low rate of tax on employment in Ireland as an important factor in increasing the number of jobs here. This provides strong incentives both for employers to hire more workers," he said.
But Fine Gael finance spokesman, Richard Bruton, argued that the Government had failed to deliver an improvement in public services. He said the electorate feared that the Government's failure to deliver this over the last five years meant it would never happen.
However, Mr Trichet also said that property prices required action in certain areas of the European Union "which are very dynamic and have a lot of real growth".
This reference most likely includes Ireland along with Spain and The Netherlands. In such areas, Mr Trichet said there was a case for "as appropriate national action as possible to calm down the market".
According to recent data from the Central Statistics Office, the construction sector accounted for one half of jobs created in the private sector in the year to May.
Mr Trichet also expressed some concern about the rate of growth in Europe's money supply. "It is also telling to see the dynamism of loans to the private sector that is much faster than growth in GDP in value terms."
