I want to return to the serious state of the economy and to focus in particular on the role of the banks in the economy at present. When the Irish economy was booming, the banks were in the driving seat. One could get a loan for anything and they were pushing money at people. However, now that the economic circumstances have changed somewhat, the tune of the banks has also changed and it appears they are now behaving in a way that may add to our economic difficulties.

I am hearing from businesses, big and small, that when loan review dates come up, the banks are in to reduce the facility, change the terms, add on extra charges and increase interest rates without waiting for the changes made by the European Central Bank. Businesses starting up anew or which are expanding find that, in effect, the banks are now closed to new businesses. In the new economic circumstances in which we find ourselves, it appears the banks are squeezing the life out of many businesses in this country and putting jobs at risk.

I do not expect the banks to act in a way that is not commercial or not responsible to their shareholders. However, they could apply their credit policies in a more measured and sensitive way in the new circumstances in which we find ourselves. I would have thought it must be in the banks' own long-term interest to ensure the Irish economy gets through the more difficult times it is now in. The banks need to look at the wider picture rather than just their own quarterly returns.

Has the Taoiseach had discussions with the major banking organisations in this country with a view to getting them to look at the bigger economic picture and behave in a more measured, responsible and sensitive way at this time? The Taoiseach has been good to the banks. I recall that in the 2005 budget, for example, he abolished the bank levy, which at the time was worth approximately €103 million per year of a benefit to the banks. The banks did very well when the Irish economy was doing well. They made huge profits, and the four larger banking groups made most of their profits here in the Irish economy.

Will the Taoiseach exercise leadership with regard to the banks? Will he call in the major banking organisations, have a discussion with them and persuade them to act in a more measured, reasonable and sensitive way with Irish business at this very difficult time? In this way, the banks and their lending and credit policies could be made to become part of the solution to our economic difficulties rather than adding to the problem, as, frankly, they are doing at present.

In my previous capacity as Minister for Finance, I was obviously in constant contact with the sector through the Central Bank mechanism and other mechanisms. This was to ensure that, in dealing with the situation that has arisen with regard to international financial market turbulence, our banking system was able to operate appropriately and properly despite the fact that an international credit squeeze was taking place, for which I was to take some responsibility, according to the Deputy yesterday. With regard to the question of the banks providing finance, while there is this international situation of which we are all aware, I agree it is important that banks continue to provide prudent risk to business and that the performance of Irish business during the good times should stand as a strong criterion for continued support for those businesses which continue to invest and to require access to finance.

It is true there has been difficulty with regard to inter-bank lending. The provision of money supply has been an issue in international banking circles for over nine months and the provision of money beyond 30, 60 and 90 days has not been as plentiful as would have been the case in the past. This is as a result of the lack of trust that has emerged due to the outcome in the United States of the developments in the sub-prime market there and the ripple effect this has had on wider banking circles.

It is important to point out, however, that, as the Central Bank has confirmed, the Irish banking system is well capitalised and is in a healthy state in terms of its own financial situation. I would agree it is important that while we recognise there has been a change in the international environment, and indeed the domestic environment, the banking system remains an important access point for capital for the development of markets and companies, and their ability to continue to trade. This is a point that will be continually made both by me and my successor in the Department of Finance.

I do not accept the banks operating in this country can hide behind the international credit squeeze any more than the Taoiseach can hide behind the global economic environment with respect to the domestic policies that are applied here. We know there is an international backdrop both to what the banks do and what the Taoiseach does in regard to the economy. However, the banks, particularly the four major banking groups, made most of their profits in this country in good times. I believe they have a responsibility now to help to get the economy through the more difficult times it is in.

They will clearly not do this voluntarily. Looking at what they are doing and how they dealing with individual businesses and customers, it does not appear as though they are willing to do it. This is why I put my suggestion the Taoiseach, and as he did not respond to it, I must put it again. Will he invite the banks to have a discussion with him, as Head of Government, so that he can talk with them and encourage them to take a wider, longer-term view of the Irish economy and encourage them to assist in whatever strategy he has, although he has not yet told us about it, to move the economy forward from where it is at present and on to better times?

My specific question is this. Will the Taoiseach ask the banks in to have a wider discussion with him about where the economy is going, their lending practices and to encourage them not to squeeze the life out of businesses at this time? At present, what is happening is that the banks in their engagement with individual businesses are throttling them, and in their engagement with new businesses in particular are telling them to clear off and that they will not make money available to them. Unless people who want to start new businesses can access start-up capital, they will not start up these businesses and therefore will not be able to contribute to moving the economy forward. Unless existing businesses get some kind of relief and understanding from the banking organisations, they will find themselves in continuing trouble.

This is something I have already done as Minister for Finance. It continues to be done by the Minister and the Department of Finance. That is an option which is available to us at any time. In fact, last night I was discussing with advisers the issue of how we can ensure that we do not have a reaction to the downturn as if we were not capable of getting through it robustly, on the basis of a much better economy now than would have been the case when these sorts of challenges faced the economy a quarter of a century ago. This has already been discussed among ourselves. We will continue to encourage and ask that the application of finance to prudent risk and to the availability of risk capital continues to be available to business. That is important but at the end of the day, we all know the duty they have to their own shareholders, as private companies. However, of course, we will continue to encourage in that direction.

Regarding the idea that there is no strategy, our strategy has already been outlined. We do not deal with strategies based on the publication of any finance house, however reputable. We base them on our own official data, which will be becoming available to the Department of Finance in terms of its mid-year——

The data were pretty wrong at budget time.

The budget day statement outlined the downside risks, all of which have materialised. If the Deputy knows of anybody who predicted the downturn in the international economy that we have seen in the past eight months, I ask her to give me a shout because I do not know of anyone who did.

There were many people who did.

It certainly was not in any of the policy positions put forward by Deputy Burton's party during the election.

What about Mr. Joseph Stiglitz? Has the Taoiseach read his work? He could start there.

To stick to the point that Deputy Burton's leader raised——

The Taoiseach, without interruption, please.

To stick to the point that Deputy Gilmore raised, the strategy is very clear. We will take whatever measures are necessary to have a sustainable budgetary strategy going forward. We will seek more value for money on the current side. We were already talking about moderating the rate of increase in current expenditure anyway because we want to continue to apply priority investment on the capital programme. That is the basic strategy that we have devised and will continue to work on, based on the data as it emerges. We are only half way through this year. We will take whatever assessments can be taken on the basis of up-to-date data next week and proceed from there. There will be continuing forecasts from various finance houses about how they ultimately see the performance of the economy this year which we will only find out about when the outturn emerges in December.