To what extent do you believe that Europe is the answer to Ireland’s economic problems?
Founder and Chairman, Libertas
It’s a very important part of the answer to the problems that we currently face economically. Whether one supports the provisions of the Lisbon treaty or not, all informed observers agree that Europe, to the extent that it provides a country of 4 million people with a free market of 500 million consumers to sell goods into, has been and remains central to our economic well-being.
Economic recovery in this country will not happen by virtue of our turning our backs on Europe. For three decades, The European Union has provided Ireland with financial and Economic support as we ascend into the ranks of the world’s most economically developed nations. Now, the Union’s focus has turned away from Ireland towards the millions of people who were deprived of economic liberty by being forced to spend half a century behind the Iron curtain. Freedom strengthens economies, and raises the standards of living for all who experience it, and now that our cousins to the East have the chance to compete with us, our country faces a stiffer challenge in getting out of this slump than we did in the late 1980’s.
So while we can never abandon the European market, we must retain, and aggressively pursue the right to maintain our own aggressive and distinctive economic model. Our competitive advantage in taxation is being eroded by the flat tax economies of the East, and the increasing abilities of the labour force both in Europe and the Far East. Now is the time to commit ourselves to the goal of achieving a low-tax, low-cost, high-output economy at the highest end of the international value chain. It’s important that we recognise that this will require sacrifices which will be painful in the short term, but it’s also important to remember that sacrificing our biggest market will lead only to ruin.
Professor of International Business and Development, Trinity College Dublin
To what extent is Europe the answer to Ireland’s economic problems? The question reminds me of the great anarchist slogan that I used to see painted on London walls: “if society is the answer, you’ve asked the wrong question”. Not many people in Ireland appreciate as yet how much of the current recession is of our own making. Our recession is one of the deepest by far in Europe. It was caused by a series of policy errors, many of which date from Charlie McCreevy’s stint as Minister of Finance, though the political roots of the problem stretch much further back. Business people a few years ago voted McCreevy the best Irish finance minister in history. Few economists would agree.
“When I have the money, I spend it”, McCreevy said; “when I don’t, I don’t.” Spoken like a true accountant! But even the most basic macroeconomics course points out the flaws in this way of thinking. Government fiscal policy should be counter-cyclical. When the private sector economy is in a downturn, the state, if it has the fiscal resources, should use them to offset the recession by increasing spending or reducing taxes. Irish fiscal policy, by contrast, has been pro-cyclical since at least the mid-1960s, and stands out among European countries in this respect.
Auditor, DU Business & Economics Society
Europe was in the past and will be going forward the answer to Ireland’s problems. Its benefits come in two parts; EU aid, and the access to foreign markets that membership of the European Union gives.
In the early 1990s, as we started to move from being the “poorest of the rich” to the dynamic modern economy that was The Celtic Tiger, EU membership was crucial to our growth and enabled Ireland to build infrastructure and invest in education (and broke the Irish psychology of failure for the first time in the history of the state). These improvements will remain with us through this economic downturn. The infrastructure and education investments made possible can still be put to use as the EU looks to help the new member states in a similar position to that of Ireland 20 years ago.
Eastern Europe is now as attractive to foreign direct investors as Ireland was 15 years ago, recently spelt out by Dell’s departure to Poland. With this in mind, we need to now look to strengthen our current competitive position. The causes of Ireland’s initial growth have now been brought level with competing nations, and so we now have to compete harder for investment here.
Putting aside other benefits offered as members of the EU, access to its Single Market is a crucial part of Ireland’s economic well-being. Ireland is a small island and without our exports we are a crippled economy.
Ireland needs to now look to avoid a depression. The recession will flush out any sour areas of the economy and will help in the long term. We need to focus on our unique strengths for growth in the future and once we have rode this recession out, Europe will continue to answer our problems. While not a top priority of EU aid, we can still thrive by using all we now have to compete on a global scale.