The Taoiseach will this morning have seen the verdict by Standard & Poors' on the Government's handling of the economy, and its analysis was damning. It argued that even were the global economy to improve in 2010, Ireland would be left behind because of a seriously damaged banking system and a calamitous loss of competitiveness over the past five years. As a result, it states there will be little or no growth in the economy before 2012. Effectively, Ireland has been demoted from the first division of European economies.

This obviously will mean credit shortages, insurance indebtedness and that it will be impossible, from this perspective, to export our way out of this recession. I have been informed that this downgrade could cost €200 million this year and somewhere between €400 million and €1 billion next year. What is the Government's assessment of the cost of the downgrade by Standard & Poor's? Has the NTMA provided its analysis or verdict to the Government on the cost of this downgrading?

The Minister for Finance and his Department have not yet had an opportunity to inform the Government of that cost. However, I note the announcement by the rating agency Standard & Poor's that it is revising its rating of Ireland from AAA to AA+. In considering this, one also should bear in mind the following key points. Ireland is not unique in this regard as a number of other countries have had their credit ratings revised recently. A range of factors, both domestic and international, influence the ratings that countries attract. While we recognise that we have challenges, particularly in the public finances and our banking system, the Government has taken considered and deliberate action to help stabilise and bring sustainability to the public finances for some time. That will be further evidenced in next week's budget.

Ireland is currently experiencing a significant contraction in economic growth and it is expected that we will grow above trend once world growth resumes. After a long number of years running surpluses, the Government will have to run deficits for the next number of years. A sizeable part of the deficit relates to the very substantial public investment capital programme we continue to pursue. While there is considerable pressure on the public finances, we should recall that we are coming at this from a position of relative strength given our relatively low public debt burden. While it will rise over the next few years, our debt levels should be at projected EU averages. Many of the factors that facilitated Ireland's economic success in recent years still remain. The NTMA has already successfully raised significant sums on international markets this year.

Regarding the banking situation, we have continued to take a strategic approach regarding the State guarantee, the recapitalisation policy and risk assessment is being actively considered by the Minister.

If the sum is to be €500 million, that will be 1,000 gardaí, 1,000 teachers and 200 schools. I assume the Government has made some analysis of what this will cost. The Taoiseach says there will be some evidence of changes to the banking structure in the budget next week. Our belief is that the Government could have acted more swiftly and decisively in this matter. Arising from that, what was the cost to the Government of the advice of Merrill Lynch? Has that been taken into account or is the evidence given to the Government shoved aside in respect of what Mr. Peter Bacon says about a bad bank for toxic debt?

When does the Taoiseach expect world trends to resume? He made the point that Ireland will be able to get back on top when world trends resume. Does the Taoiseach have a timescale for that? What actions is the Government taking to ensure the country will be competitive, which it lost in the past five years, to avail of it?

I refer to the comment made by the analyst of Standard & Poor's, which is not a comment from Fine Gael or the Labour Party, to the effect that when it looks at the Government through the financial institutions, it trusts neither. The analyst made the point that the probability is that a change of faces behind the Cabinet table is needed to restore trust, integrity and confidence in the Irish financial institutions and the Irish Government. The €500 million question is what is the Taoiseach's view of that. Does he share the analysis of the analyst, whose words can change the market overnight, that there is no confidence in the Irish Government, that the Taoiseach has failed to deal with the economic challenges of the country, that he has presided over a disastrous banking system, that we have had a calamitous loss of competitiveness and that the Taoiseach should go?

I have no comment on the gentleman from the credit rating agency other than to note that his job concerns credit rating. I do not know what he knows about Irish politics or what the choices are.

He must know something.

The important point is that the Government has reacted in the face of a deteriorating financial situation——

But never acted.

——last July, in the October budget and in February. Very little support was available from all sides of the House. We continue to do this and will do so again next week. There is broad agreement in respect of economic discussions that have taken place and a recognition that a structural deficit of the order of 8% has emerged in the public finance position. Over the next five years we must deal with that and satisfy the European Commission regarding the Stability and Growth Pact parameters and requirements regarding the deficit being reduced to 3%. That represents a major challenge for the economy and this House. The Minister for Finance will indicate his plans next week, specifically on how we will deal with the remainder of this year and looking to 2010 and 2011.

Regarding the question on when the upturn will come in the world economy, nobody can give a definitive timescale for that. There are indications, perhaps on the optimistic side, that towards the end of this year the green shoots of recovery may emerge in the US economy. It is too early to say how effective the stimulus plan implemented by the Obama Administration will be. The G20 meeting in London this week is an important event in that it will hopefully see a measure of international co-ordination with regard to how we can deal with this international financial crisis and get a greater degree of transparency into the financial system that would provide confidence.

In our domestic effort, we will continue to examine the next steps for the banking situation. These are not decisions that could have been taken some months ago. They can only happen on the basis of due diligence and expert advice provided to the Minister and the Department by the NTMA, the Central Bank and others. That deliberation continues.