Taoiseach Bertie Ahern has rejected suggestions that the country is heading towards an economic downturn but acknowledged it will face "adjustment pressures" as a result of a slowdown in the housing market.
Speaking at a Fianna Fáil parliamentary party meeting at Druids Glen, Co Wicklow, this afternoon, the Taoiseach said that the economy remains strong despite a slowdown in the housing sector.
Tánaiste and Minister for Finance Brian Cowen
At the same event, Minister for Finance Brian Cowen also said the fundamentals of the economy remain strong, but he warned that the rate of increase in public expenditure will have to be much lower than in recent years.
Mr Cowen's comments were seen as a warning that he may not be as generous in his December Budget as he has been in recent times.
"Let us be clear: the Irish economy is strong and growing," said Mr Ahern today.
"It will face adjustment pressures, as will the Exchequer, as a result of any return to less frantic activity in housing construction. It will face continuing competitiveness challenges across all sectors of the economy.
"But there is no place for negativity. No need for any pessimism. Above all, there is no place for politically motivated attempts to talk down the economy and the achievements of our people across all sectors," Mr Ahern said.
The sentiments were echoed by Tánaiste and Minister for Finance Brian Cowen, who said that the economy was stronger today than at any point in its history.
In his speech to the party faithful, Mr Cowen said that the fundamentals of the Irish economy remain strong.
"We have implemented sound and balanced fiscal policies that have helped pave the way for a sustainable future. General Government Surpluses have been recorded in nine of the last ten years and it is estimated that the ratio of public debt to GDP will fall to around 24 per cent this year - the second lowest in the euro area. This all helps to provide the basis for secure economic prosperity into the future.
"By acting responsibly, we are ensuring that the economy will be able to respond to future shocks without disturbing the low, fair taxation model which today underpins our prosperity," the Minister said.
The Minister for Finance that the government had ambitious plans for investment across the country and for targeted improvements in key social services. However, he added that these could only be implemented if a responsible fiscal policy was followed.
"The rate of increase in current public expenditure… will have to be much lower than in recent years," Mr Cowen said, adding that the latest indications are that economic growth may be lower than 4.5 per cent in the near term.
