LABOUR LEADER Eamon Gilmore demanded a Government apology over the state of the economy.

At Opposition leaders' question time, in advance of the Budget, he accused Taoiseach Brian Cowen of failing to take responsibility for what had happened.

"You are not taking responsibility for the people who are going to have to bear the pain and whose pockets are going to be rifled now in order to pay for what you did over the past number of years," Mr Gilmore said.

"I think, frankly, Taoiseach, that you owe an apology to the Irish people."

Mr Gilmore said the "hard landing" did not come as a surprise, adding that it was the job of the Taoiseach and the Government to manage the State's economic affairs. "Was it sustainable to build suburban housing estates around the edge of some villages? It clearly was not," he said.

"Was it sustainable to build apartment blocks in places where there was never apartment living and there never was going to be apartment living?"

Mr Gilmore claimed it was "a party for a privileged circle", many of whom were close to Fianna Fáil.

Rejecting Mr Gilmore's claims, Mr Cowen said there was more than a property issue involved.

"It is a far more deepened, sophisticated and developed economy than was the case five, 10, 15, 20 years ago," he added.

"And we do ourselves a disservice by suggesting that is not the case."

While it was true that approximately 12 per cent of output was coming from the construction-related sector, it related also to increased public investment.

Section 23 relief, the Taoiseach added, was not available in every part of the State. "It was available in certain parts of the country since the early 1980s, where we have major urban renewal in our towns and cities . . . where we have brought far more activity and living cities and towns back to life after the prolonged recession of the Eighties," he added.

Mr Cowen said those were the right policy decisions at the time.

The Taoiseach said there would be challenges in the weeks, months and years ahead.

"Yes, there will be a requirement for everybody in our system to pay more than was the case up to now," he added, "that's true. But let me say this: in relative terms . . . we will ensure that we are in a far better position than we were five or 10 years ago."

The Taoiseach said the State was in a far better position now, and would be in the year ahead, than it was when 600,000 fewer houses were built and a million fewer people were working.

"We are facing into the coming year, let it be said, when increased unemployment, which I very much don't welcome . . ." said Mr Cowen. He added that growth achievements were solid. They had not evaporated despite Opposition rhetoric, he said.