The
Small Firms Association has claimed that Irish and EU employment laws are
preventing the creation of jobs in Ireland. The SFA said a survey it
conducted in association with Bank of Ireland found that complying with
employment legislation was a hindrance to business expansion. It said 58% of
companies surveyed said employment laws were a disincentive to recruiting staff.
And 88% of businesses involved in the survey did not have a dedicated human
resources person to deal with the complexities of employment legislation. (SFA
14/08/2003)
Ireland
is continuing its
staunch opposition to any clauses in the EU's draft Consitution that would make
it easier to scrap national vetoes on tax. "Our position is quite
clear. We will be against this", said Irish Finance Minister Charlie
McCreevy in an interview with the Financial Times. Mr McCreevy argued that
national vetoes on fiscal matters go "to the heart of a representative
democracy". Deputy Prime Minister Mary Harney confirmed that this is
"a red line issue" for
According to Friends First economist Jim Power: "The monetary policy of the Bundesbank is far too tight. Inflation control cannot be the primary concern of the ECB." Some economists believe that signing up to the euro was a huge economic mistake for Ireland. Power describes it as a victory of politics over economics, and says that even to question Ireland's entry was politically taboo. Bloxham Stockbrokers' Alan McQuaid argues that Ireland should have kept its alignment to the British pound. "Ironically, at the time we joined the euro, we were moving politically closer to Britain. "I think our prospects would have been better if we had stayed pegged to their currency -- first, because the British economy is stronger, and, secondly, because the Bank of England is far better than the ECB." (The Post - Dublin, 5 January, 2003)
Unions in Germany, France and Italy are expected to vote in favour of strikes as they step up their campaigns for higher pay and greater public sector investment. Portugal and Spain have been blighted by industrial action already and even in Ireland, where strikes have been rare since the mid-1980s, talks on a new national pay deal have collapsed. (The Times December 23, 2002)
look at the means by which it advances itself. In order to
push ahead with Nice, the Irish Government disregarded last year's clear
referendum result, changed the rules and changed the question. Last night's Yes
vote was predictable. It became more or less inevitable once Bertie Ahern had
amended the law on the conduct of plebiscites. Until now, Ireland has had
admirably fair rules on referendum campaigns, providing for equal airtime on
state media and for the distribution to each household of a pamphlet setting
out the case for each side. This did not mean, of course, that there was total
equality: pro-EU campaigners were always able to outspend their rivals overall.
But it did at least ensure that every voter got to hear both sides of the
argument. Just before the Dail rose for its Christmas recess and with one day's
notice, however, the
government scrapped this rule. The way was thus clear for the Yes side to
exploit its massive financial advantage. The
cost of the advertising was 20/1 in favour of a Yes. Of course, a side-effect of the change
is that Ireland will no longer have fair referendum campaigns on any subject.
In order to ratify an essentially undemocratic treaty, Ireland has had to debase
its own democratic procedures. Not content with rigging the rules, Mr Ahern also
rigged the question. Voters were asked to ratify Nice and, in the same
vote, to oppose Irish participation in the EU army. Thus, many supporters of
neutrality - a natural anti-Nice constituency - felt obliged to vote Yes. To see
how outrageous this is, imagine that in a British referendum, Tony Blair phrased
the question: "Do you want to join the single European currency and
preserve the supremacy of the UK Parliament?" Every big gun from Lech
Walesa to St John Hume was wheeled out. It is something of a surprise, then, to
read the Nice Treaty and find that enlargement is barely mentioned: it comes in
a codicil tacked on at the end, and could easily have been agreed without a
referendum. Nice is about deepening rather than widening the EU. It provides,
among other things, for the scrapping of 39 national vetoes, the harmonisation
of justice and home affairs and the establishment of pan-European political
parties. The Euro-elites were never going to allow mere public opinion to stop
all this. Once again, they have got their way. (Daniel Hannan MEP for South East
England - Sunday's Telegraph 20/10/02)
The secret document shows that the wealth of the boom years is gone and the nation's coffers are sorely depleted, and appears to be the smoking gun of a pre-election budget fraud. After promising more good times under a returned Fianna Fail-led government prior to the election, it now appears that hundreds of millions of euros are to be extracted from taxpayers as huge cuts are being made in education and health. The revelations will also further damage the government's prospects of winning popular approval at the second attempt for the European Union's Treaty of Nice next month. Fine Gael's finance spokesman, Mr Richard Bruton, said: "Three days before the election, the Taoiseach and the Minister for Finance gave a solemn assurance that their budget was fully on target and no cutbacks were planned, secretly or otherwise. Within three weeks of the election, these same people had a detailed menu of cutbacks and new charges for public services on the Cabinet table, demanding their immediate implementation." Sinn Fein's Dail leader and Finance spokesperson Caoimhghin O Caolain TD has said that the government's deliberate deception of the public extended beyond the Finance Minister. There was now a need for a second General Election, not a re-run of the Nice referendum, he added. "The secret memos issued by the Minister for Finance Charlie McCreevy TD shortly after the General Election clearly show that the Minister and the Government as a whole deliberately deceived the public in order to secure office. It is inconceivable that the Minister for Finance and the Taoiseach did not know the true state of the public finances in the run-up to the General Election when they promised that there would be no cutbacks. "The State is currently going through a second referendum on the Treaty of Nice on which we have already voted. It is a second general election we need, not a re-run of Nice, because the government secured office under false pretences. "The Government is fooling itself if it believes these revelations will not impact on the Nice referendum. People should vote on the basis of the content of the Treaty and on that basis they should Vote No. But trust is also an issue. The Government asked people to trust them that there would be no cutbacks. They asked people to trust them that they would implement their decision on Nice 1. They asked them to trust them with Irish neutrality. Having failed to keep trust with the electorate they cannot now expect them to ignore that record." (IRISH NEWS ROUND-UP http://irlnet.com/rmlist 20-22 September, 2002)
The Irish Parliament has opened the debate over the Nice Treaty ahead of a planned second referendum to get the European treaty approved. The debate, however has so far done little to drum up enthusiasm for the Nice Treaty. On the contrary new elements have been added to the debate, which are not helping the Yes side at all: the Irish economy is slowing down, consumers are on alert because of rising prices and farmers are protesting over EU agricultural reform plans. (EUobserver.com 9/9/02)
The rapid deterioration of the Irish budgetary position is causing concern in Brussels and Dublin. Ireland had a budget surplus of 4.6 percent in 2000, but the Irish Finance Ministry are now predicting a deficit of 1.2 percent. The OECD said, "the shift in fiscal stance from sizeable structural surplus to small deficit has been inappropriately large and suggests weaknesses in the budgetary system" (FT, 21 May 2002).
Irish consumers are being ripped off by retailers who are using the introduction of the euro as an excuse to "substantially" raise prices, a study shows. The report reveals that in Ireland the cost of medical care, clothes, alcohol and many kinds of entertainment has leapt since the launch of the euro. (Euobserver.com 25/2/02)
The Irish Tánaiste, deputy Prime Minister Mary Harney, has ruled out Irish acceptance of tax harmonisation in the European Union. "Ireland is not for turning on this issue," Ms Harney was quoted by The Irish Times whilst speaking at the annual dinner of the Institute of Taxation. There are "no circumstances in the short, medium or long term in which Ireland will cede our fiscal autonomy to EU institutions". (Euobserver.com 25/2/02)
Mr Bruton, former Irish prime minister, is preparing a report for Ireland's national parliament that recommends ending the practice of putting each new EU treaty to a popular vote. (EUobserver.com 22/1/02)
A roadshow to ascertain the Irish people's views on the future of Europe has successfully begun, but the Government may not like what it is going to hear. If the opening debate in Waterford on Monday night is a reliable guide, then voters are no more impressed by the Nice Treaty now than they were when they voted against it in last year's referendum. Speakers at the meeting, organised by the National Forum on Europe, opposed the treaty by a majority of four to one. "None of us are naïve enough to think that we would be having this meeting had the outcome [of the referendum] been different," said Ms Maureen O'Carroll, an Independent town councillor from Tramore, to applause. Mr William Murphy read a prepared script in which he lambasted the bureaucrats in Brussels who "dictate the number of peas in a pod" and "the noise level of our lawnmowers". He was followed by a man describing himself as a "British subject" living in Kilmacthomas, Co Waterford, who thanked the Irish people for voting down the Treaty of Nice. "The treaty is not about enlargement; it's about turning the EU into a two-tier community of first- and second-class states," he claimed. The EU was simply not democratic enough. The Council of Ministers took decisions in secret, while the European Parliament was not a parliament at all. It could not make laws, could not raise taxes and could not appoint a government. "It can do what Waterford County Council can do, but it's not a parliament," he said. Ms O'Carroll, the Tramore town councillor, said she knew of two people who had voted Yes the first time, but were so insulted by the Government's reaction to the vote that they were voting No the next time. The result was no more close than that of the divorce referendum, but that was not going to be rerun, she added. (Irish Times 16 Jan 2002).
The record level of house-building also explains why houseprices have softened, although here again the deceleration in house price inflation is far from the sharp falls in property values predicted by some with monotonous regularity for the past five years. The tax cuts announced in the Irish budget will also kick in from the spring and inflation will probably average 4 per cent, down from this year's 5 per cent reading. The news on interest rates may well be mixed, though, with an early 2002 cut by the European Central Bank to give way to rising rates in the latter part of the year, but this will only materialise if the global economy has recovered. Unemployment will tick higher in the first part of the year, before stabilising, because the pace of job creation will slow to below the natural growth in the labour force, which will remain high for some years even without the added impetus of net immigration. The Government is also spending freely, which will add to GDP in 2002, and as this year has demonstrated, Irish exports are far more resilient than imports, so adding a further positive impetus from the external side. The key negative, as in 2001, is investment spending by corporate Ireland, which turned down in the second quarter of 2001 and could well continue to decline into 2002, as firms trim capacity and postpone expansion plans until the global outlook becomes less cloudy. Nevertheless, the economy in aggregate should pick up noticeably from the second quarter, and finish the year on a strong note. (Irish Times December 27, 2001)
Ireland really did sell its birthright for a mess of pottage. It sold itself into euro-slavery that day. Now the euro notes, tokens of bondage, are here. It's ironic that this final humiliation should come just a few days after Argentina was reduced to riots, 27 deaths, debt default and a state of siege. What Argentina is suffering now, Ireland will very likely suffer over the next two or three years. Argentina in effect did in 1991 what Ireland has done. It gave up an independent currency (admittedly a hyperinflationary one, an excuse that the Irish government did not have), locking the peso one-to-one with the dollar. In the early years of this regime, the dollar was falling, making Argentina's exports competitive, and US interest rates were low, boosting Argentine spending. This created several years of boom and allowed the country's public debt to fall to levels lower than, for instance, Ireland's. But when the dollar turned around from 1995 onwards as the US began strong, technology-driven growth, the Argentine economy, which had practically nothing in common with the US, began to suffer horribly. Three-and-a-half years of recession and ballooning debt preceded financial collapse, social distress and political upheaval. Why could Argentina not simply devalue its currency, as Ireland did so successfully in 1993? Because most Argentine firms and families had taken out loans in dollars. Devaluing the peso would make it much harder for them to repay those loans, bankrupting many. From January 1st, 2002, even the blindest will be able to see that Ireland has no way out. Because its economy behaves so differently from the continental economies, sharing a currency and monetary policy with them will, after creating an uncontrollable boom and rising inflation over the past few years, now bring bust, rising unemployment, deflation, falling house prices and bankruptcy. Even the Commission has just admitted this in its Annual Economic Review. But even if the lawyers were to say that Ireland could leave the single currency and allow a new Irish pound to depreciate, everyone's debts would be in euros. Monetary union in Europe makes potential Argentinas of all the small eurozone countries; those that, unlike Germany and France, do not have the political clout to get the ECB to set monetary policy for their benefit. Romano Prodi spilt the beans a couple of weeks ago: the euro would create a crisis that would allow the EU to grab a whole set of economic policy weapons that it has so far been politically unacceptable to advocate. Forget about the Irish people's rejection of Nice: the EU behaves as though that treaty were ratified. After all, it is only Ireland that has said No, and Ireland can be disregarded. And in any case the 2004 treaty will simply leapfrog Nice. It will create a European superstate. That superstate of course, will not be a federation. Blair, France and, though not openly, Germany all favour an intergovernmental political union. In such a union policies are decided for the whole of the EU by the big three, with a locally-powerful vassal role as local colonial administrators for compliant politicians from the small countries and no place for democracy anywhere. (Irish Times 8/1/02)
The Nice treaty on EU enlargement held up by Irish opposition is a flawed plan on course for a second defeat by Irish voters, Valery Giscard d'Estaing, the head of a new Convention on the bloc's future, said on Thursday. Veteran former French President Giscard d'Estaing told France Inter radio the treaty aimed at widening the bloc to include 12 new members, most from eastern Europe, was a failure. "The Nice treaty satisfied no one, and what's more, at the time, it could not be ratified because one of the countries refused to ratify it - Ireland," he said, referring to the referendum held in Ireland last June. "They will vote again but you know that current polls show another "no" and if they (the Irish) say no, there is no Nice treaty, as it must be ratified unanimously," he added. Ireland's veto of the treaty rocked the 15-nation bloc to the core and reminded its sometimes remote leaders that the public must be kept on board. Irish premier Bertie Ahern has said it is essential his people ratify the treaty and hopes to win a second referendum on Nice, despite the pessimistic signs, some time next year. (Reuters 21 Dec 2001)
'Five countries in the eurozone face the threat of severe economic problems as a direct result of their membership of the single currency' according to an offical report by the European Commission' The report warns that Ireland, Finland, Spain, Portugal and Holland are trapped in a policy straitjacket they cannot escape' snipped 'Government deficits are likely to soar, unemployment will rise and their banking system will be threatened with crisis' The report admits that the five joined the euro at the wrong exchange rates' The admissions came in an end of year report of the EC's directorate of economi affairs in the section 'Macroeconomic Developments in the Euro Area' Ireland is particularly vulnerable. (Financial Mail on Sunday 16/12/01)
THE economy is performing better than anywhere in Europe because Finance Minister Charlie McCreevy refused to do what the EU Commission wanted in last year's Budget, says Taoiseach Bertie Ahern. And Commissioner Pedro Solbes and Mr McCreevy are "closer to being at one on the Irish situation than they ever have been," Mr Ahern told the Dail. Fine Gael leader Michael Noonan said Mr McCreevy had said he had no idea where the revenue flow had disappeared to and was once again "lecturing the Commission," stating he had no intention of taking its advice in economic management of the country. "Does the Taoiseach think this is a prudent course of action in circumstances where it is the Government's stated intention to ask the Commission to give it permission to put equity into Aer Lingus," Mr Noonan asked. The Taoiseach said he believes Commissioner Solbes would now acknowledge, although it could not have been predicted, that "if we had done some of the things suggested to us last January we would have had far more difficulties than we have at present." However, there was now a situation to manage and economic growth must be kept as high as possible. This time last year the economy was growing at 12pc, on a par with Singapore, which now had negative growth, said Mr Ahern. Economic growth this year would be 5pc or 6pc and that would now carry into the first quarter, when it would be more like the 2.6pc indicated by the Central Bank and ESRI. On keeping jobs, Tanaiste Mary Harney had already stated work permits would have to be looked at. (Irish Independent 8/11/01)
War threatens to undermine Irish neutrality. There are growing concerns in Ireland that Europe's continued involvement in the US-proclaimed war against terrorism is undermining the countries neutrality, writes the Financial Times. The neutrality issue was partially responsible for the rejection of the Nice Treaty by Irish citizens in the June referendum. The issue has now been seized on again by anti-European groups as evidence that the EU is undermining Dublin's neutrality. Roger Cole, chairman of the Peace and Neutrality Alliance in Ireland, said: "It was always our objective to keep neutrality at the centre of the forum discussions. It will certainly be easier now that there is a war going on." (EUobserver.com 19.10.2001)
The leader of ATGW, the Irish Transport Union, Michael O'Reilly, joined the "No" campaign. ATGW is part of our TGW. Bertie Ahern the Irish PM allegedly asked Tony Blair to get rid of O'Reilly. Blair told Bill Morris to do something. O'Reilly is now suspended from his post on some trumped-up charge and has been gagged from talking to the press. (Congress For Democracy 13/7/01) http://EUobserver.com/
EU foreign ministers issued a statement saying in effect that they would ignore the result of the Irish referendum. In a common communiqué, they said, "While respecting the will of the Irish people, the foreign ministers expressed their regrets at the outcome of the Irish referendum on the Nice treaty. They rule out any re-opening of the text signed at Nice. The process of ratification will be continued on the basis of this text and in accordance with the planned timetable. The other fourteen states have said they are ready to help the Irish government in all possible ways to find a way out by taking into account the worries which the results of the referendum reflect, without re-opening the text of the Nice treaty." By this statement, European leaders formally gave notice that they have abolished democracy. It is a long-established fundamental principle of democracies that governments are responsible to the people who elected them and to their representatives. By stating that the ratification process is a rubber stamp which can be overruled at will, the governments of Europe have explicitly stated that they do not recognise the rights of their national legislatures (for instance to ratify treaties, or to change the constitutional structures which govern their countries) and that instead they, the governments, enjoy those rights instead. This is, quite literally, a coup d’état. (European Foundation Intelligence Digest Issue No. 121 1st – 13th June 2001)
Given the direction in which the EU is going, and the almost total lack of interest by Irish people in the way Europe is run, the survivor is not likely to be the Irish technology-related values and laws. The EU seems intent on overriding key elements of Irish e-commerce and technology policy that the government here has worked hard to construct. The Irish state has shown that it understands the political and economic linkage in a digitally defined world. It has hammered together enlightened policy to govern several areas of this, in particular last year's e-commerce legislation stands out, with its privacy and encryption protections, and open guidelines for the use of electronic signatures. But the EU has been considering policies that could completely wipe out the advantages the State's internationally recognised good policy confirs. Recently leaked European Commission documents suggests the Commission's considering a level of surveillance that would throw the entire EU into the same ridiculous boat as the British, with their ill-advised and widely belittled Regulation of Investigatory Powers Act. The EU is also considering changing Internet taxation laws to require the merchant to gather taxes according to its resident state, rather than the purchaser, according to the purchaser's state - a requirement that could effectively shut down the entire EU as an international e-commerce force. Then there are punishing copyright and patents laws in the pipeline that could damage software developers. Decisions taken at EU level on telecommunications, infrastructure development, taxation and the liability of online companies could crush the nascent e-commerce environment across Europe and in this (Irish) State. (Karlin Lillington, Irish Times, 15/6/01)
The statement by Prof F Giavazzi of Milan university, that inflation is now part of the Irish adjustment process and that earnings should increase to slow down the rate of economic growth, will not come as a surprise to most Irish economists. The question of how the Irish economy would adjust to economic shocks, given the constraints imposed by EMU membership, received considerable attention. The burden of adjustment must shift to the labour market. In other words the adjustment process has moved from money and foreign exchange markets to fiscal policy on the labour market. The result is that a loss of competitiveness will slow economic growth. Wage inflation is running at 8% and numerous trade unions are pursuing claims of 30%. A major problem is that the economy is far less flexible than in the pre-EMU days. The labour market is clearly much more rigid and slow to adjust than the money markets. As a consequence booms and recessions will tend to last much longer. (Dr Leddin, University of Limerick, Irish Times 15/6/01)
The Irish government rejected a Bill designed to make ministers accountable to parliament for their actions at EU level. The Bill addresses many of the concerns of the Attorney General, Mr Michael McDowell. He said that the result of the Nice referendum was a triumph for democracy. (Irish Times 22/6/01). In the context of the EU, " a regulation or directive is effectively irreversible, once made". Thus the spirit of democracy and the constitution is attacked by the power of attorney given to government ministers on their visits to Europe. They are effectively infallible on all decisions made on Europe; thus a sense of dictatorship is developing around the European project. (R Dunne, Irish Times 22/6/01)
The rejection of the Nice treaty by a majority of Irish voters has spawned a torrent of vilification. "No" voters have been branded as 'knaves, fools, religious bigots, ignoramuses, selfish, misinformed, xenophobes, etc. They have been told that their action has halted the vital measures needed for EU enlargement. Their fear of having to contribute to the costs of expansion and being overwhelmed by eastern European immigrants is very selfish. Their fear of being forced into a militaristic superpower is branded as naive. However, the Swedish foreign minister Ms Anna Lindh said that despite the Irish "no" vote, enlargement would go ahead anyway and that the treaty would not be changed. The European Commissioner for Enlargement, Guenter Verhuegen, said " Such a referendum in one country cannot…block the most important project for the political and economic future of the united Europe." A correspondent in the Irish Times wrote "For those who are seriously concerned about the integrity of the democratic process in the EU, the message is clear: all members must ratify changes to EU treaties before they can become law, but if a member fails to do so, the changes will go ahead anyway. Romano Prodi on a visit to Dublin on the 20 June said that, "The Nice treaty is not necessary for enlargement. It's without any problem up to 20 members and beyond 20 it is only required that they put in some notes of change to the accession agreement. But legally it is not necessary although politically it is" (Irish Times various dates, June 2001)
Eamon O'Cuive the Irish Minister of State for Agriculture declared that he voted "no" to the Nice treaty. He wrote that the Irish Constitution, Article 6, stated that "all powers of government, executive, legislative and judicial, derive under God from the people whose right it is...to decide all questions of national policy. (Irish Times 22/6/01). The Irish Prime Minister, Bertie Ahern, seemed to betray his people when he attended the Gothenburg summit and "apologised" for the Irish by opposing the Nice treaty. (Various correspondents Irish Times June 2001)
Referring to Mr Prodi's comments that EU enlargement was legally possible without Nice, Mr Coughlan, leader of the (Irish) National Platform, said the Commission President had done the "No" side a "good turn". The Nice Treaty, he said, "was an attempt by the big states to change the rules before allowing the small states in". (Irish Times 23/6/01).This was confirmed by Jack Straw UK Foreign Secretary, when he wrote, "Nice gives more votes to large countries such as Britain. Otherwise we could have been outvoted in an enlarged EU by countries with smaller populations." (Daily Telegraph 4/7/01)
The final votes in the Nice Treaty referendum show that the "No" side won by a fairly slim majority. Out of 997,826 votes cast, 453,461 (46.13 per cent) were in favour of the Nice Treaty and 529,478 (53.87 per cent) were against. There were 14,887 spoiled ballot papers. This is the first time that an EU treaty has been defeated by a referendum in Ireland. (EUobserver.com 08-06-2001)
In a recent speech the president of Estonia, Toomas Ilves, complained that the existing member states were treating the applicant countries like barbarians at the gate. Commenting on the eagerness to get a new treaty agreed before the candidate states come in. (European Voice 1/3/01). A correspondent in the Irish Times commented that by rejecting the Nice Treaty they were preserving sovereignty for the new entrants that they would otherwise be denied. (Irish Times June 2001)
The governor of Ireland's central bank warned of a continued rise in private borrowing, threatening to make Irish people among the most indebted in Europe. (Financial Times 31/3/01)
The Centre for Economic Policy Research in a report "Defining a Macroeconomic Framework for the Euro Area" argues that Ireland should be allowed to run a higher inflation rate than other euro-zone countries. The rise in wages and prices will reduce Ireland's international competitiveness and slow the booming economy without the need for higher taxes or cuts in public spending. (Financial Times 30/3/01) www.cepr.org
Fine Gael and the Irish Labour party joined forces on Tuesday in demanding that the Irish Government postpone the date for the referendum on the Nice treaty, reports the Irish Times. Jim O´Keeffe, the Fine Gael spokesperson on foreign affairs, told the Irish times that while his party supported the referendum, its passage by the people could not be taken for granted. However, it is not only the date that now seems to be open to debate. Mr Quinn said there were elements of the Nice Treaty, which he believed could be better, and that there were some issues that could be revisited. This new controversy among the yes side is welcome news for the "no" campaign in Ireland. Mr John Gormley, from the Green Party, who campaigned for a no vote, told the Irish Times, "we regard the treaty as a further attack on democracy, a treaty that moves decision-making further away from the Irish people. We've now less democracy, less accountability; Ireland has lost its veto in over 30 new areas. We have lost our right to a commissioner, our voting strength in the crucial Council of Ministers, and we have lost three of our 15 MEPs." (EUobserver.com 4/4/01)
The governor of the Bank of Ireland recently warned of a continuing rise in private borrowing, threatening to make the Irish people among the most indebted in Europe. (Financial Times 31/3/01)
The true motives behind the EU's unprecedented attack on Ireland this week are starting to emerge. Didier Reynders, the Belgian finance minister, admitted that several EU states acted because they were no longer willing tolerate the payment of subsidies to Ireland when Dublin was in effect using the money to cut taxes for Irish companies. "In public, it was about the overheating of the Irish economy," he said. "But it was clear there was something, not discussed openly: "is it logical for a country like Ireland to give favourable tax breaks to industry while benefiting from EU aid?" The EU pays almost 10 per cent of the Irish budget, even though the Irish high-tech sector is trouncing EU rivals and per capita income is higher than in France and Italy. It is not clear what price the Irish government will pay for going ahead defiantly with tax cuts. The European Commission has pressed the nuclear button by invoking Article 99, which could be used as a punitive instrument to block funding. In a sign of things to come, key members of the European Parliament called this week for a suspension of €190 million of structural funds earmarked for Irish motorways and infrastructure. (The Daily Telegraph Saturday, February 17, 2001)
Charlie McCreevy has been giving out cheek in Brussels. Instead of cringing, whimpering and begging for mercy from the eurogroup, he made the astounding argument that he was Ireland's Finance Minister, responsible to the Irish electorate, and that the Irish budget was a matter for him, not for Messrs Fabius and Eichel and the rest of his euro-accusers. Why couldn't Ireland do what it liked with its own money? Oh, Charlie, Charlie - don't you remember that Ireland sold its soul to the devil at Maastricht? Don't you remember all those billboards bearing the glad legend, "Six billion pounds"? Don't you remember the balloons and champagne when the euro was launched two years ago? Don't you remember the warning issued in Dublin by Hans Tietmeyer, then Bundesbank president: "In EMU, independence in wage and fiscal policy is an illusion that must be abandoned". You are not Ireland's Finance Minister, Charlie, you are the local land-agent of Brussels. If the bullying big boys in the lawless playground of the eurogroup tell you to stop building hospitals and roads or to break your election promises on tax cuts, you have to do what you are told. (Irish Independent 28/1/01)
The Irish have sought to control inflation with a German-style wage pact involving employers and unions, but inflation has outpaced pay raises. The latest strike, involving high school teachers demanding a 30 percent pay raise, has shut down many schools. (AP DUBLIN 26/1/01)
The Irish Minister for Finance, Mr McCreevy, has accused Ireland's European critics of being jealous of the Ireland's economic success and has insisted that he will not be rewriting his Budget - irrespective of the views of his fellow EU finance ministers next month, writes Irish Times (EUobserver.com 26/1/01)
The European Commission is expected at the weekly meeting on Wednesday to demand Ireland to change its economic policies and limit the risk of higher inflation. The EU Commissioner for Economic Affairs, Mr Pedro Solbes, Tuesday night circulated to his fellow commissioners a draft report on the Irish economy understood to be strongly critical of the Budget's tax cuts, writes the Irish Times. The Irish budget provides for record spending increases and generous tax cuts while the economy is forecast to continue growing rapidly. Ireland has the highest inflation of the 12 euro countries. Ireland's difficulties lie partly in the "one size fits all" monetary policy of the European Central Bank that has resulted in an interest rate that is far too low for Irish domestic conditions. According to the Financial Times, the Commission will also review the policies of Euro members Greece, France, Italy and Austria as well as the UK and Denmark, which are outside the single currency. (EUobserver.com 25/1/01). In a test case with major implications for Britain, Ireland was given a formal reprimand for pursuing a "pro-cyclical" policy of tax cuts that were stoking up the Irish economy, endangering the broader project of monetary union. Pedro Solbes, the economic and monetary affairs commissioner, took the unprecedented step of invoking Article 99 of the European Union treaties, claiming this gives Brussels authority to "enforce economic policy co-ordination" among member states to protect the common interest. The move will require the backing of EU finance ministers, but EU sources say the commission would not have gone ahead without prior approval from France, Italy and Germany. Mr Solbes said member states could not be allowed to pursue whatever tax and spending policies they wanted once they joined the euro. The commission's treatment of Ireland contradicts claims by the British Government that joining the euro zone would not entail any loss of budgetary control. (The Telegraph 25th January 2001)
The employers' organisation, IBEC, said cool heads were needed to ensure that domestic sources of inflation were managed. "Average inflation for 2001 will be very much below the 5.6 per cent average for last year if shortsighted wage claims above the renegotiated PPF are resisted - by all sides. Such discipline is necessary to maintain stability and protect jobs." Over the past year the rise in the cost of housing at 26.2 per cent, has increased most significantly as mortgage interest rates and rents have risen. (Irish Times 21/1/01)
Several weeks of labour unrest provide an inauspicious backdrop for Charlie McCreevy's fourth budget this week. But with the fiscal balance in record surplus, the Irish finance minister looks set to ignore the advice of the IMF and OECD and announce another expansionary budget of large spending increases and further tax cuts. The minister is under pressure from his cabinet colleagues to provide a cushion before the general election which may be called as early as next summer and has to be called by May 2002. His immediate concern is not the rate of inflation, which most local economists say is largely immune to fiscal policy stimulus, and is in any event the product of short-term external factors beyond the government's direct control such as high oil prices and the weakness of the euro. The objective underpinning the budget announcement is to do just enough to salvage a national pay deal between business and trade unions that, as recent unrest has shown, is under severe strain in the wake of the rise in inflation. But with inflation at over 6 per cent, almost three times the European Union average and a 15-year high, the trade unions are not unnaturally pressing for a renegotiation of the pay terms. The orthodox view, as expressed by Brendan Walsh, dean of economics at University College Dublin, is that wage inflation, far from being the problem, is the natural antidote to Ireland's over-heating economy. "When the labour market is in such disequilibrium, the obvious thing to do is to raise wages," he says. When nominal exchange rates are fixed, rising wages cause the real exchange rate to appreciate, thus eroding the competitiveness of the economy. Allowing wages to rise takes the heat out of the economy and reduces the risk of a hard landing. But the Irish Business and Employers Confederation warns that in a wages free-for-all, it would be the less profitable, Irish-owned, old economy manufacturers that would suffer most as wages were bid up in a tight labour market. This could make the economy more vulnerable to external shocks such as a sharp appreciation of the euro, which most experts believe is long overdue. In such circumstances it may be not inflation but deflation that the authorities will have to cope with. (Financial Times Dec 4, 2000)
The railwaymen are striking. The nurses have only just returned to work. Industrial disputes at Aer Lingus, the state airline, recently grounded staff for the first time in 20 years. As the country dubbed the "Celtic Tiger" is rapidly discovering, economic booms rarely come without a price. The country’s secondary teachers, for example, pulled out of the PPF earlier this year and are now on strike for a 30 per cent pay rise. Lochlann Quinn, chief executive of Glen Dimplex, one of the country’s largest manufacturing companies, and chairman of Allied Irish Banks says "If there had been no euro at all, we’d have seen much of this boom. Seventy to 80 per cent of the boom is not euro-related." But that means 20 to 30 per cent of the boom is related to the euro, and many commentators argue that the added impetus provided by the single currency may have pushed growth that little bit too far. It was in the housing market that signs first began to emerge that the Irish boom could be out of hand. The property market both commercial and residential has experienced phenomenal growth over the past five years. Ireland’s house prices have doubled since the beginning of the current economic upswing in 1993, a rate of increase that easily outpaces that seen in the British property boom of the 1980s. The housing market is not the only sign that the Irish economy is becoming too hot to handle. Over the past year or so, inflation has picked up markedly, recently reaching a 16-year high of close to 7 per cent, by far the highest in Europe. Just last month, Corel Software Systems, a Canadian multinational, announced that high wage costs were forcing it to close its Dublin office. With the euro still weak on the foreign exchanges, the PPF under severe pressure, oil prices strong and a Budget coming up, the next 12 months will be a critical period for the Irish economy. (Irish Times Saturday December 02 2000)
Inflation jumped to 6.8 per cent in October and is expected to peak at 7 per cent this month. The new figure released yesterday surprised most forecasters and many have now revised their inflation estimate for the full year to 5.5 per cent. The Taoiseach, Mr Ahern, said last night the "Government would focus on an appropriate response" to inflation in the coming Budget amidst angry reaction from trade union leaders and strong criticism from Opposition politicians. The Government has invited both sides to talks as the prospect looms of collapse of the Programme for Prosperity and Fairness. An out-turn of 5.5 per cent would cancel out the pay increases agreed for this year by the Government and the social partners under the Partnership for Prosperity and Fairness. The main components of last month's jump were housing, fuel and transport costs. The price of home heating oil rose by 13.4 per cent in October and has risen by 61 per cent since last October. Mortgage interest costs were up by 3 per cent last month and 48.3 per cent over the year. Transport costs, of which motor fuels are a major component, were up 1.1 per cent in October and 8.1 per cent year on year. (Irish Times 11/11/00)
IRISH inflation rose to 6.8pc in October, the highest figure for more than 16 years. Inflation in Ireland, which has no power to alter its interest rates to control its own economy, has not been higher since August 1984 when it stood at 7.9pc. (Irish Independent Saturday 11 November 2000)
Irish Government Minister Sile de Valera, grand-daughter of Eamon de Valera, the leading founder of the Irish State, says EU integration has gone far enough. In a distinct shift of emphasis for one of Ireland's normally strongly europhile politicians, Ms De Valera, who is Minister for Arts and Culture in the Irish Government, said in a speech last night that the EU's current push for further centralisation and integration is not necessarily in Ireland's interests. The Minister's criticisms of the EU are generating much controversy here today. "We have found that directives and regulations agreed in Brussels can often seriously impinge on our identity, culture and traditions. The bureaucracy of Brussels does not always respect the complexities and sensitivites of Member States. . . Brussels, Birmignham, the Burren - the same European Union but different worlds.. . While the (Irish) Goverment is promoting policies of decentralisation, in the European Union the opposite is taking place with the push towards closer integration. It is a move I would not personally favour. It is not necessarily in our interests," the Minister said. (Irish Independent Tuesday 19 September 2000)
There is one sure solution (to inflation), of course: the Government could withdraw our currency from the Euro. I said a moment ago that the Tory Euro-sceptics were right, and they are: national independence, that is, the freedom of a Government to act in the interest of the nation, and not in the interest of some aggregate called ``Europe,'' demands independent control of the national currency. The British still have it. Their low rate of inflation is the prize they have for refusing, so far, to trade sterling for the Euro. We could pull our currency out of the Euro. It would be daring, it would be shocking, and it would be brilliant: or have you forgotten that our present boom can be dated from the moment when we freed ourselves from the shackles of the Exchange Rate Mechanism and allowed our currency to find its value in the market and not in the corridors of Brussels? It would be a courageous thing to do. It would mean the Irish had decided that the Irish themselves can best manage their own economy: that no Dutch central banker with an office in Frankfurt need ever interfere again. It would be an act of national self-confidence and national courage. And wouldn't it just stun those retired Majors and those bigots in the Tory party? (Irish "Sunday Independent" 20/8/00)
INFLATION in Ireland soared to 6.2pc last month, the highest rate for nearly 15 years, triggering fears that prices in the booming economy could spiral dramatically. The rate was much worse than expected and prices are now rising at nearly three times the rate they are in Britain, which continues to have the lowest inflation in Europe. The figure was released by the Irish Central Office for Statistics yesterday, and was a sharp increase on the 5.5pc rise recorded in June. According to the EU's harmonised index, which treats housing costs differently, the rate was 5.9pc, also up 0.5pc. At the current rate, Irish prices are rising fast enough to double within 12 years. Ordinary people are beginning to feel the pinch, with new house prices up 20pc, transport up 9pc and services up 7pc.(D Telegraph16/8/00)
`For rising inflation: blame the euro. For interest rate hikes: blame the euro. For labour shortages: blame the euro. For higher bank charges: blame the euro. For the sluggish Irish stock market: blame the euro. For property prices: blame the euro.'' Remember they all told us that the euro would be a panacea. It would keep prices stable (tell that to first time house buyers); it would cure inflation (we are more than double the EU average); it would attract foreign investors to the ISEQ (the opposite is happening as Irish institutions dump Irish stock and buy foreign shares) etc, etc. It has all gone horribly wrong. The mantra is already monotonous: if in trouble, blame the euro. Not our fault, the politicians repeat endlessly. Fine, except these are the same clowns who led us blindfold into the promised land. 1990's Utopia has become 2000's scapegoat. A Sunday Independent poll of IBEC businesses- held before the euro's launch- found that 86 per cent of employers expected the euro to rise. Last week the euro tested recent lows. Euro-apologists blamed the buoyant US economy, an excuse which is wearing thin as sterling and the yen continue to show the new currency a clean pair of heels. In Ireland we have a cavalier attitude to inflation: the euro will rise, oil prices will fall and it will be all right on the night. That is the Government's anti-inflation policy. The euro is no longer simply a problem for Ireland because we are now completely incapable of controlling our economy. It is also a problem for Europe. It has exposed fundamental weaknesses in the European economy. The European economic model itself is now under fire. The markets are clearly signalling this message. It is time to think the unthinkable. (13/8/00 Irish "Sunday Independent")
"Finnish boatbuilders Aquador have closed their factory in Ireland and moved production to Tallinn in Estonia. Boatbuilding at the Little Island, Cork, factory stopped in mid-July, making 62 people redundant. The large plant was originally built by SeaRay in 1986, and Aquador had been building there for two years. Richie Allen, sales manager for Aquador Boats Ireland, is shocked at the decision. Business, he says, had been going very well. 'We'd sold all production commitments for next year. We'd stepped up production and increased the model range from two to seven and we had tooling for two new models'. (Eurofaq posting 4/8/00)
Irish inflation jumped to a 15 year high, as figures from across the euro zone showed prices rising faster than expected. Irish inflation came in at 5.5%, the worst since 1985. Harmonised numbers for the euro zone as a whole showed inflation at 2.4% in June, well ahead of the ECB’s target of 2%. Britain has the lowest harmonised inflation rate in the EU, at 0.8%. The leader of the Irish Amalgamated Transport and General Workers Union said, "Inflation is spiraling out of control, while wages are tied to minuscule increases. It cannot be tolerated any further." (Daily Telegraph 19/7/00)
The Vintners Federation of Ireland (VFI) has dismissed today’s drinks price freeze as ‘a populist measure which will have no impact on inflation.’ The reaction came as the Minister for Labour, Trade and Consumer Affairs, Mr Tom Kitt, signed into law a price-freezing Order for a range of drinks sold in pubs, hotels and restaurants. According to Mr Kitt: "Competition provides the most effective means of keeping prices down, and this policy has been pursued by all Governments over the past decade. However, as an interim measure, and as part of a package approved by the Government to counter inflation, I have now introduced a statutory control on the price of drink." The new law, which is backdated to May 15th and will be in effect for six months, is part of the Government’s anti-inflation measures. However, the VFI has said that the measure does not offer a solution to increasing inflation. (The Irish Times 10/7/00) Only 11 out of 94 licensed premises visited by Director of Consumer Affairs inspectors were able to produce evidence that they had not increased drink prices since May 15th. This follows an order freezing certain drink prices which came into force on July 6th. The Director of Consumer Affairs, Ms Carmel Foley, intends to prosecute publicans who are shown not to have complied with the order freezing the price of 16 drinks at their May 15th level. (Irish Times 18/7/00)
The (Irish) Government is seeking to include the banks and building societies in a six-month, across-the-board freeze on all professional fees in an effort to curb spiralling inflation. However, as the extent of the Government's campaign to rein in price rises became clear yesterday, opposition was already emerging from hospital consultants who indicated they would not be reducing or capping medical fees as a result of a planned meeting with the Minister for Health tomorrow. The Irish Hospital Consultants' Association (IHCA) general secretary, Mr Finbar Fitzpatrick, said consultants were facing increases of up to 10 per cent on the running costs of their practices. Medical indemnity charges in particular were running well ahead of inflation and rising by double figures for some specialities. The Minister for Finance, Mr McCreevy, confirmed yesterday he would be meeting the Irish Bankers' Federation (IBF) on Thursday to ask it not to increase fees and other charges. He is also to talk to building societies about mortgages. Efforts to curb lending growth, particularly mortgage lending, may also prove problematic for the Government under EU competition law. A plea to the main financial institutions to reduce the amount of money they are lending is unlikely to receive a positive response from banks which do not want to hand a competitive advantage to EU counterparts operating here. It has been learned that meetings have taken place in the last week between senior officials in the Department of the Environment and bodies representing architects, building surveyors, suppliers of building materials and engineers about keeping costs down. A meeting with the Society of the Irish Motor Industry to discuss motor costs is also planned in the next few days. (Irish Times 18/7/00)
How is it possible that, barring the lone voice of Anthony Coughlan, we sleepwalked into membership of the euro? Soon the euro will be about as valuable as a 1973 zloty or a 1921 German mark, and our economy is going to be buffeted, if not pushed into deep recession, by a storm not of our making. The economic failures which are causing the euro to behave like an anvil in thin air are not our failures; and the financial adjustments that will follow to correct the damage to this bizarrely worthless currency will punish us in order to satisfy largely German concerns. So we are living in a German empire, in which German economic requirements take precedence over ours. The very people Charlie McCreevy was anachronistically calling "pinkos" are in charge of the most delinquently run countries in Europe, where the demands of the welfare state take precedence over the economic base which keeps it going. Morality has taken the place of supply and demand as the engine of the economy. Treasuries have been ransacked according to the principle of what governments should do rather than what they can do. ("From the Irish Times" Newspaper - 28 April, 2000)
Giving evidence to the Treasury Select Committee on Tuesday 20 June, Simon Wolfson pointed to the experience of Next stores in Ireland which have experienced a rise in prices of 20 per cent and a rise in wages of over 20 per cent since the start of EMU. He pointed out that exchange rate stability with the euro would only benefit the 15 per cent of companies trading with the Eurozone, whereas inflation or stagnation caused by an inappropriate interest rate would damage the whole economy. (BfS briefing 22/6/00)
Soon the euro will be about as valuable as a 1973 zloty or a 1921 German mark, and our (Irish) economy is going to be buffeted, if not pushed into deep recession, by a storm not of our making. The economic failures which are causing the euro to behave like an anvil in thin air are not our failures, and the financial adjustments that will follow to correct the damage to this bizarrely worthless currency will punish us in order to satisfy largely German concerns. So we are living in a German empire, in which German economic requirements take precedence over ours. The very people Charlie McCreevy (Irish Finance Minister) was anachronistically calling "pinkos" are in charge of the most delinquently run countries in Europe, where the demands of the welfare state take precedence over the economic base which keeps it going. Morality has taken the place of supply and demand as the engine of the economy. Treasuries have been ransacked according to the principle of what governments SHOULD do rather than what they CAN do. It would have been possible to have taken the British wait-and-see option, but,of course,that would have offended our sense of unBritishness, that curious quality which co-exists with a desire to imitate so much of what goes on in British life. So the euro, that still mythical currency to which we have attached ourselves as providently as we might to a unicorn, has plummeted catastrophically in the past 16 months. It has fallen even against such currencies as the mighty WON of North Korea and the PESO of Cuba, a country which is so incompetently run that soon it will be importing `Havanas. Maybe we can GET out before the other high-unemployment, high-inflation economies of Eastern Europe scramble onto SS EURO, turning it into a winos' club, barely floating and drifting towards the iron-shores of insolvency. Is there an option for us to get out? Can we not merely negotiate our way out of Maastricht, but renegotiate our relations with the low- taxation, low-inflation, low-unemployment maritime economies of the Atlantic rim? Whereas once we surrendered authority to Rome, now we surrender it to a hive-minded political class, which have decided almost as one that the euro was a Good Thing and an independent currency was not. The eleventh hour has passed. The chimes of midnight draw near. After the twelfth peal it will be too late. ('An Irishman's Diary', The Irish Times, 28 April 2000)
A reason for the Euro's continuing decline is the de-facto money printing in Ireland (where there are negative interest rates and an estimated money supply growth of 40%). The quantity of money is growing so rapidly in Ireland that they can afford to buy imports from outside the Euro-zone in ever greater quantities, in spite of the decline in the Euro, because their purchasing power is rising far faster. This effect will carry on until Ireland threatens price stability in the Eurozone, which might be some time. It is also born out by the economic recovery in France, in spite of even higher taxes & the 35-hour week, which should be job reducing measures. Irish Euros are simply filtering through and inflating the French economy too. In about 2 years time the current Irish cash-creation will have worked through and some very high interest rates will be needed to deal with it - just as Germany is recovering. (Eurofaq posting W.Palfreman 5/4/00)
A NEW currency crisis threatens the health of native Irish business as import costs from the UK soar in the wake of the collapse in the value of the euro. According to the Small Firms Association (SFA), Irish competitiveness is under threat as the euro/sterling exchange rate pushes up costs for businesses importing components or raw materials from the UK. The association warned that as Irish consumers continue to buy more UK imported goods the possibility of `bought-in inflation' increases. If the problem persists, it will result in upward pressure on Irish inflation over the coming months, said association chief Pat Delaney. Allied to the problem of the weak euro is a high oil price. This will eventually feed through to higher energy costs, putting further upward pressure on the price of manufactured goods. The extent of the problem can be gauged by the fact that Ireland is the fifth largest consumer of UK produced goods in the world. According to Mr Delaney, ``any threat of increased inflation will seriously undermine our competitiveness which has been the bedrock of our economic growth.'' (4/12/99 Irish Independent) 33pc of all Irish imports were sourced in the UK. The problem for Irish business is that 80pc of trade is done with countries outside the eurozone, most of it in sterling or US dollars. This contrasts with eurozone partners who for the most part trade amongst themselves only 12pc of their business is with non-euro countries. (Irish Independent 29/1/00)
The annual Irish inflation rate has jumped sharply to 3.4 per cent, its highest level since 1993 and further increases are expected in the months ahead. The latest rise has led to warnings of a sustained pick-up in inflation, fuelled by a weak euro and strong spending, which would lead to demands for higher wage increases as part of a new national agreement. The underlying annual rate of inflation, which excludes mortgage payments, is at its highest level in over a decade, at 4.2 per cent. According to the latest data from the Central Statistics Office, in just over two months the headline inflation rate has effectively doubled. . With 80 per cent of all imports originating outside the euro zone imported inflation is obviously a danger. Mr Austin Hughes, economist at Irish Intercontinental Bank, pointed out that Irish inflation is now way above the level that would have allowed us to join the euro under the rules set for membership. This is likely to worry international investors and depress the equity market. (Irish Times 21/1/00) The Commission has recommended approval of five Member States' economic programmes as being in line with guidelines on growth and stability agreed by EU leaders. One of these States is Ireland. (The Week in Europe 20/1/00)
NEW car buyers face delays of up to five months for the delivery of their vehicles in Ireland. Although distributors and dealers stocked up on cars in preparation for the expected increase in sales this January, demand outstripped all predictions. More than 31,000 cars were sold in the first 20 days of the new year and the total car sales for the month was 60 per cent higher than the same period last year. Ireland's allocation of the top of the range Mercedes CL, which retails at just over £110,000 and arrived in Ireland earlier this month, is already sold out. A new waiting list has begun for next year's allocation. Don Hall, from the Motor Distributors Organisation, which distributes Mercedes Benz, Volkswagon, Audi, Skoda, said there was a lead-in time in nearly every franchise and model as the industry simply could not get sufficient supply to meet demand. (Irish Sunday Independent 30/1/00)
The Irish government has agreed a 16% pay deal over next three years with trades unions, twice the level of the previous pact. Together with a pledge of tax cuts of £1.2 billion over the period, the deal represents a 26% pay increase over 33 months. Economists are confident that the deal will not threaten Ireland's competitiveness, with productivity is still rising at between 3.5 and 4%. (FT 9/2/00)
THE euro slumped to new lows against the dollar, the pound and the yen as investors responded nervously to mounting evidence of economic strains within the euro area caused by the one size fits all" interest rate policy operated by the European Central Bank. The whilstleblower was the Central Bank of Ireland which warned yesterday that inflationary pressures were building up rapidly against a background of excess domestic demand and galloping growth. It said the Irish economy grew by 8.25pc last year and is likely to achieve similar growth this year. The Bank's warning coincided with a wave of crippling strikes by transport workers demanding a 20pc wage increase on top of the generous three-year deal recently agreed between the Government and the unions. After noting that the economy was overheating, the Bank drew attention to "accelerating wages, increasing service sector inflation and sharply rising property prices". Some economists believe Ireland needs interest rates of around 8pc instead of the 3.5pc rate which applies across the 11-member eurozone. (Daily Telegraph 30/3/2000)
In Ireland students are being paid to queue outside estate agents in order to secure properties for sale when they open their doors. This is because of the property price boom fuelled by the low interest rates in the euro-zone. (Radio 5 Live 21/5/99)
Ireland would be better off without the interest rate cut necessary to qualify to join the EMU said the governor of the Irish Central Bank. ( D Telegraph 2/11/98)
Inflationary pressures in the peripheral economies of Euroland do matter despite their small overall share of the region's GDP, according to a member of the Bundesbank council. He says the bank may raise interest rates slightly before the end of the year to damp down pressure in countries such as Ireland and Finland. (European 31/8/98)
The case for Ireland's participation in monetary union was the promise of exchange rate stability, low interest rates and a strong currency. However, in the first five months of its operation, the results have been disappointing. The euro has weakened, interest rates have fallen, and exchange rate volatility has increased, not diminished. The euro's current exchange and interest rate levels are quite unsuited to Ireland's circumstances. The weak currency adds to our inflationary difficulties, while low interest rates only serve to stimulate demand when clearly the domestic need is for higher rates to curb an economic boom in danger of overheating. However, since the European Central Bank (ECB) alone controls monetary policy and sets a single interest rate for a common currency, one rate must meet the requirements of the 11 separate euro-zone national economies. This is an impossible task, given the divergent economic performances of countries like Germany and Ireland. Ireland joined the euro zone on the general expectation that Britain was almost certain to join, and would do so sooner rather than later. If that fails to materialise, and Britain stays out because the costs of membership exceed the benefits of joining, then the euro could prove to be much more of a handicap than a help to our own future economic development. (Irish "Sunday Independent" 30/5/99)
Portugal and Ireland would no longer qualify for the single currency if the decision were based in the June inflation statistics. There is an alarming increase in the inflation gap between the core and the periphery of the euro-zone. Countries are required to keep their inflation rates within 1.5% of the best three performers. In future the ECB will only monitor the HCPI for the euro-zone as a whole and will ignore national data. This leaves member states with only tax policy to keep to the euro average. (FT 31/7/98)