IRELAND IS being “battered by international storms the like of which this generation has never seen”, Taoiseach Brian Cowen has told the Dáil as he reiterated previous warnings of the need for “resolute action”.

In a grim outline of the state of the economy, he said it was likely to contract by up to 10 per cent for the 2008-2010 period with a further 100,000 job losses, “a scale of decline that is without precedent here in Ireland and with few international parallels”.

Mr Cowen declined to use the word “cuts” but said that in addition to the €2 billion in “adjustments” this year, €15 billion in “adjustments” would be required altogether over the next five years.

He said “we are facing the most difficult global economic conditions in 70 years”, most of the world’s advanced economies are in recession, “and global output is expected to decline for the first time in recent memory”.

Opening a two-day Dáil debate on the economy, the Taoiseach signalled that while he hoped it would be possible to conclude an agreement with the social partners, the Government would move to introduce the €2 billion in “adjustments” whether or not there was a deal.

“In any event, the Government will simply have to take the decisions necessary to achieve our objective of stabilising the public finances.”

However, he insisted that the Government “has a clear strategy which we will continue to implement”, including a “medium-term approach to renew and revitalise the economy” and “specific short-term measures to address the immediate difficulties we face”.

He told TDs “the most severe financial crisis since the Great Depression is taking its toll, for example, on the US economy, now in the middle of recession that began in December 2007 and which may prove to be the longest and most severe of the post-war period”.

Stressing Ireland’s exposure to the international economic situation, he said “the combined value of our imports and exports is equivalent to around 150 per cent of national output – which is among the highest shares in the developed world”.

Exports “represent around four-fifths of our national output, which is more than double the EU average, and means our fortunes are inextricably linked with those of global and European markets”.

He said “there is little point in looking back at how some of this might have been anticipated or avoided. “The reality is that the present situation is unprecedented and calls for clear thinking and resolute action.”

The “achievement of significant reductions in public service pay and pension costs will only be realistic if the burden of the adjustment is fairly spread across society”, including “moderation in executive remuneration, in the banking sector in particular”, and that those “who benefit most from the economic boom make a particular contribution to the adjustment required”.

He insisted that the Government had acted with “care and prudence” in dealing with the banking sector, and was determined “to ensure that our two main banks continue as strong, independent institutions”. As part of its strategy “we are also acting to support mortgage holders who get into arrears on their mortgages”.

The Taoiseach also stressed that “in the banking sector there must be a new approach to doing business”, and “poor standards of behaviour on the part of well-paid executives must not be allowed to result in ordinary, decent people losing their jobs and businesses struggling to stay afloat”.

He said that “despite the budgetary restraints the Government is maintaining proportionately the largest capital investment programme in Europe”.

Mr Cowen defended the pace at which the Government is addressing the economic crisis.

“In the period ahead we face many difficult decisions. It is easy to call for quick action – but we need to ensure they are the right decisions – based on careful analysis of a fast-changing economic situation and following consultation with the major stakeholders in Irish society.”

He said without appropriate action an annual GDP deficit of between 11 per cent and 12 per cent was likely each year up to 2013. “This is not sustainable, and urgent measures are now required to start the process of fiscal stabilisation.”