Irish economy 'is not all gloom'

Brian Cowen's party is likely to be punished by recession-hit voters

The Irish Prime Minister has said it is not all doom and gloom on the economic front and people can begin to have confidence about the future.

Brian Cowen said he was right to be optimistic that Ireland could return to rapid growth as early as next year.

He pointed to improving trends in tax receipts and some signs of a renewal in the property market.

Mr Cowen was addressing a rally of his Fianna Fail party, which faces a drubbing in elections next month.

He said his government's plan for stabilising the economy was working and the "smart economy" plan would ensure Ireland emerges from the recession with good prospects for sustainable growth and jobs in the future.

Confidence

"There are more tough but necessary decisions ahead to secure our financial and economic security. We will not flinch from making these decisions," he told the campaign meeting.

The fall in tax receipts that started after the bursting of a property bubble appears to be bottoming out, which together with government spending cuts will ensure Ireland's debt to GDP ratio will stay well below the European average, Mr Cowen said.

Heavily oversubscribed bond sales recently showed investors had confidence in Irish fiscal management, with signs of renewed interest in house purchases set to boost the domestic economy, he added.

Many analysts agree Ireland's small, open economy will be among the first to benefit from an international upswing, but some fear the tax rises unveiled in two emergency budgets in October and April will stifle economic growth.

Although one Irish bond sale last week was almost five times oversubscribed, many investors have given all Irish assets a wide berth after a string of banking scandals.

The government has also received mixed reviews for a new "bad bank" plan which could cause a doubling in national debt.