Labour Party leader Pat Rabbitte has warned that Ireland's balance of payment problems are threatening the economy.
Labour Party leader Pat Rabbitte:
In a speech to a meeting of the Association of European Journalists in Dublin today, Mr Rabbitte claimed that despite increased job creation and a budget surplus of over €5 billion, Ireland is "no longer paying its way in the world".
Figures published earlier this month by the Department of Finance show the exchequer recorded a surplus of €2.265 billion. This was €5.2 billion more than predicted.
But Mr Rabbitte said that despite the record tax takings, the deficit in the State's balance of payments is running at €8 billion per year. He said Ireland's combined deficit on trade and other international dealings now stands at almost €13 billion.
"By the time this self-satisfied coalition leaves office, the total will have reached more than €21 billion," he said. He accused the Government of masking cracks in the State's finances by "hiding behind the euro".
He said the balance of payments deficit showed the economy is overheating due to a reliance on borrowed money. "I am not saying that it is now a problem in itself, although it will eventually become one.
"The tendency is to continue to rhyme off the achievements - and there have been achievements - and to gloss over the fragilities that are undoubtedly on the horizon."
The balance of trade measures the ratio of payments and liabilities for goods and services coming into and out of the State.
But the balance of payments, which includes balance of trade and other net incomes in both directions is, in Ireland's case, dominated by multinationals based here which send profits out of the State.
Although the balance of trade is in surplus, the high outflow of multinational profits has led to a deficit in the balance of payments.
In its annual commentary last month, the Economic and Social Research Institute (ESRI) warned the trade surplus had been in decline since 2004 while the increase in expatriated profits had been increasing.
It predicted the trend would continue this year leading to a balance of payments deficit of 5.6 per cent of GNP in 2007.
Mr Rabbitte warned that the decline in Irish exports, rises in inflation and the slowdown in the property market posed threats to the economy. "There are dangers that the train will hit the buffers," he said.
Mr Rabbitte also accused former taoisigh Jack Lynch and Charles Haughey of leaving Ireland with the largest public debt in Europe. "They discovered government borrowing as a way to create a false sense of economic success and an equally false popularity," he said.
"If we continue to have a Government with no one at the controls and no action is taken to restore balance to the economy, the danger is that recession will do the job for us the hard way."