Bounceback due to spending says Cowen

Former Taoiseach Brian Cowen arrives to give evidence at the Oireachtas banking inquiry
Former Taoiseach Brian Cowen arrives to give evidence at the Oireachtas banking inquiry

Former premier Brian Cowen has claimed Ireland bounced back from its devastating financial collapse quicker because of his spending spree while in office.

On his second day before a parliamentary inquiry into the crisis, the ex-Taoiseach insisted he takes responsibility for his role as leader of the country in the downturn.

But he insisted his policies while in power were “plausible”.

His Fianna Fail-led government decisions were stress-tested against threats, but there was a “clear misjudgment of the risks and potential impacts”, he told the Oireachtas Banking Inquiry.

Mr Cowen also said his approach was “broadly shared” even by political opponents.

At the time the public was questioning if spending on improved services and other investments was happening fast enough, he told the hearing.

Mr Cowen said if his government had spent less during the boom, the country would not have suffered as severely in the dramatic nosedive from the late 2000s.

But he said that would have also meant fewer jobs and lower growth before the crash, which “would have in turn reduced our ability to come out of recession as quickly as we have”.

“One way or the other the impact of the financial crisis has made the serious adjustment in the public finances which could not have been avoided in any event,” he said.

After four years as Dublin’s finance minister, Mr Cowen reigned as Taoiseach from May 2008 to March 2011.

He was behind the infamous blanket guarantee for six banks at the height of the financial turmoil in September 2008 - which will cost Irish people g64 billion (£45bn).

He resigned as Taoiseach and party leader in 2011.

The same year his party suffered a bruising wipe-out in the general election by voters intent on punishing them for the crash.

Since then, Mr Cowen has taken more than g725,000 (£520,000) in pension payouts from the public purse.

Mr Cowen said a broad banking guarantee, agreed in a late-night decision in September 2008, looked like a safer option than nationalising Anglo Irish at the time.