Potential Disaster for Ireland if UK Opts Out of European Union

The amount of genuine ‘Euro-skepticism’ that really exists in the United Kingdom is about to be put to the test.



The UK has always had a vocal faction who are very unhappy with the EU. This skepticism ranges from those who want to have their London parliament retain more of its power rather than ceding ever-more to Brussels, to those who want the UK out of the European Union altogether.

British Prime Minister David Cameron has announced that, should his Conservative party be re-elected, a referendum will be held in the UK by 2017. The vote will likely include a number of options and will include an option for the country to completely leave the Union. Britain previously decided to remain outside the Eurozone and retain its own Sterling currency. This proved to be a very wise decision in retrospect, given the financial devastation that the single currency has left in its wake.

Had Ireland retained its own ‘Irish Punt’ currency and thus control of its own Central Bank then there is no way the property bubble that has wrecked the Irish economy would ever have been allowed to grow to the proportions it did. Since interest rates were set by the European Central Bank Ireland was lumbered with low interest rates, cheap loans and a voracious appetite for buying property at precisely the moment it needed it least. Ireland had 1 and 2% interest rates when it should have had 5, 6, and 7% to cool the property market.



While these events are history now, it is with a sense of foreboding that the Irish public and politicians view the vista of our nearest neighbour and largest trading partner actually leaving the European Union completely.

The effects of such a move for Ireland would be wide-reaching. Britain is the export economy upon which Ireland relies most. If trade becomes more difficult or is taxed at a higher rate then the effect on the Irish economy would be severe.

It remains to be seen what the overall response will be from the British public. As David Cameron himself put it:

“The biggest danger to the European Union comes not from those who advocate change, but from those who denounce new thinking as heresy. In its long history Europe has experience of heretics who turned out to have a point.”

Ireland is certainly feeling the pain for having ignored its own heretics who predicted doom when the country joined the Euro currency.

by Michael Green
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About the author

Michael Green Michael Green is Manager of The Information about Ireland Site

6 thoughts on “Potential Disaster for Ireland if UK Opts Out of European Union

  1. I’m sorry, I do not agree with the central premise of this article at all, which seems to be that Eurozone membership was the primary cause of the economic mess the country finds itself in. While it would be nice to blame someone else for our troubles, this kind of economic revisionism is simply unwarranted.

    “Had Ireland retained its own ‘Irish Punt’ currency and thus control of its own Central Bank then there is no way the property bubble that has wrecked the Irish economy would ever have been allowed to grow to the proportions it did.”

    If you think so, fine. But let’s engage in a bit of counterfactual debate. Suppose Ireland hadn’t adopted the Euro in 2000. Would the government have intervened to prevent the property bubble from happening then? All the evidence suggests no. There was still plenty they could have done to dampen down growth in the property market in the years leading up to the crash. They could have sought to increase stamp duties, instead of decreasing them. They could have abolished mortgage interest relief. They could have considered ways of introducing a property tax ten years ago, instead of now when so many people are in negative equity already. A tax on mortgages would have swiftly stemmed the flow of cheap ECB money flowing into the Irish property market. Did the government ever seriously consider any of those policies? No, they didn’t.

    Certainly, Eurozone membership might have limited Ireland’s options in dealing with the crisis AFTER it happened. But the crisis had several causes – not having control of our own interest rates was, given the mindset that prevailed in government and Irish society during much of the last decade, a minor, if not irrelevant, factor. On the other hand, the benefits of Eurozone membership are plain for anyone in Ireland who does business in the Eurozone, or has travelled within the Eurozone, or works for one of the many companies that have chosen to locate in Ireland due to its membership of the Eurozone. Overall, I’d argue that the loss of monetary independence is a price worth paying. The price for incompetent governance, sadly, is one that we cannot afford to pay.

    If Britain did leave the EU (a question that might be put to UK voters in 2017, if the Tories win an election they look likely to lose), of course that would raise issues for Ireland. However, I believe the best response for Ireland would be to seek to strengthen our ties with Europe – it’s a simple numbers game: 250-300 million Europeans to trade with, compared to 50-odd million in the UK. Also, if the author does believe that staying out of the Euro has enabled Britain to escape ‘the financial devastation the single currency has left in its wake’, he might like to check out the latest GDP figures for the UK. Across the water, they’re currently coining the phrase ‘triple-dip recession’.

    • Hi Henry,

      I am afraid we will just have to agree to disagree on this matter. It is just impossible to know what the effect would have been had Ireland remained outside the single currency. I think it is pretty clear though that one consequence would have been that the Irish Central Bank would have had interest rates at a much higher rate than they were (rather than the low rates imposed by the European Central Bank in response to a sluggish German economy). This certainly would have reduced at least the SCALE of the property bubble and thus the scale of the subsequent collapse.

      Regarding your suggestions for other methods whereby the property market might have been cooled, alas there was just not the political will for this, from ANY of the main parties, Fine Gael and Labour included. Combine that with very poor and impotent regulation and you have a recipe for disaster,

      regards

      Michael

  2. Hi Henry,

    I’ll have to disagree with both of you.
    Our problem is that we are witnessing the creation of a new communist SuperState. There are over 60 members of the European Parliment who have had communist ties. Mr. Barosso himself was a supporter of Chairman Mao!
    You remember don’t you? He slaughtered 70 million people. No big deal.

    Henry you said “Overall, I’d argue that the loss of monetary independence is a price worth paying”. I say the loss of any type of independence is a crime.
    As Amschel Rothchilds once said, “Give me control of a nations money supply, and I care not who makes it’s laws”

    Do you really think strengthening our ties with Europe is going to stop 40,000 people leaving this country every year?If its so great to work in the Eurozone, why do Irish people predominantly go to Australia or Canada?Did you know that there is over 50% youth unemployment in nearly all the mediterainian countries? 60% in some cases.

    Why would you want to strengthen ties with this complete and utter mess?? We need to get out now!!

    Arguing about interest rates?? yes that has a part to play in this mess, but you’re both missing the big picture.We have been taken over! The Lisbon Treaty that we rejected and then accepted, was the re-branded EU constitution.

    We need to do what Iceland did.

    1) Let the banks fail
    2) Arrest some bankers

    No debt on our shoulders is key. I mean a new born baby is born with €20,000 debt attached to his/her head.Allowing these criminals to continue with their European project is our problem. Not being able to think for ourselves, believing we must always be led is our problem.

    And as to how the property markets might have been cooled? It would have been good if our banks didn’t engage in predatory lending, selling mortgage backed securities to investment banks and seeing obscene short term profit.

    Of course rating agencies played a big part too. They got paid to rate these securities. Of course they all got a AAA rating and it was good times. Since anyone could get a mortgage house prices soared.

    Then when the mortgages went bad, our banks were in trouble. So the taxpayer foots the bill for these criminal acts. The government & the EU are also complicit in this. Providing the right conditions for this type of bubble to start in the first place.

    This kind of criminality is planned. Do you both think its an accident or a mistake that this crisis happened? Did you know that the Bilderberg group are meeting in Watford this year? Do you know what the Bilderberg group is?

    Do you ever wonder why ex- goldman sachs employees are appointed prime ministers of indebted countries?

    and i leave you now with a quote from John F. Kennedy before he got shot in the head.

    “For we are opposed around the world by a monolithic and ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence, on infiltration instead of invasion, on subversion instead of elections, on intimidation instead of free choice, on guerrillas by night instead of armies by day. It is a system which has conscripted vast human and material resources into the building of a tightly knit highly efficient machine that combines military, diplomatic, intelligence, economic, scientific and political operations. Its preparations are concealed, not published. It’s mistakes are buried, not headlined. Its dissenters are silenced, not praised. No expenditure is questioned, no rumor is printed, no secret is revealed.”

    There is a plan to rule this world…… Europe is just a part of it.

    • Niall, your argument is so confused, I hardly know where to start. Michael reckons that Eurozone membership was a prime cause of our economic disaster. I say that it wasn’t. Apparently we’re both wrong?

      First off, you say we are witnessing the birth of a communist superstate… run by the Bilderberg corporation? From what little I know of them, I think it’s safe to say the one thing they are not is Communists! The problem with Europe at the moment is certainly not too much communism. Rather, I think the economic ideas of that well-known leftie Margaret Thatcher leading to the complete lack of regulation and an out-of-control financial sector, as you mentioned, might have been a more proximate cause.
      Incidentally, your figure of 60 MEPs having communist ties… I’d hazard a guess that most of those 60 are from the former Iron Curtain states in eastern Europe, where pretty much any politician over a certain age will have ‘communist ties’, purely because of the time and place they were born. They, like most of their fellow countrymen, have rejected communism and moved on. To suggest they are Communists is as accurate as calling the last Pope a Nazi.

      Do you really think strengthening our ties with Europe is going to stop 40,000 people leaving this country every year?If its so great to work in the Eurozone, why do Irish people predominantly go to Australia or Canada?Did you know that there is over 50% youth unemployment in nearly all the mediterainian countries? 60% in some cases.

      I did, and do, know about the unemployment rates in southern Europe (would you like me to spell Mediterranean for you?). I don’t see how the numbers leaving would be any lower if Ireland were not in the Euro zone. You seem to be under the impression that Ireland was doing quite alright, thank you, until those nasty Europeans came along and ruined everything. In fact, much of the impetus for the 90s boom came from our EU membership. Now that Europe is in crisis, Ireland, too, finds itself in crisis, since we are part of Europe. We’ve been particularly badly hit because of the nature of the property bubble that was allowed to float here; because of a series of typical FF giveaway budgets to buy elections inflating spending, costs and everything else; and most seriously of all, the absolutely idiotic decision to give an unlimited guarantee to the banks. We may never know the truth about that, but ultimately, our own elected leaders, and not those in Brussels, must take the rap for that. Throughout the crisis, our export base has held up reasonably well; if we did quit the EU, you can bet that would be the first thing to collapse.
      As for why Irish people are going to Canada and Australia rather than Spain and Italy, you don’t just suppose it’s because they speak the language there? There are more going to the UK than either of those countries, though they’re not exactly having the best of things either over there. Though if you think we’d be better off leaving and joining a brand-new Canausire Union, fair enough. Or we could just go it alone, and see where that gets us. Not very far, if history tells us much. If you think the loss of any independence is a crime, that’s a valid and principled viewpoint; however, most Irish people have a more pragmatic view, that as a small country we’re better off working with others, which inevitably involves some compromises. After all, recessions were hardly unknown in the good old days of the 30s, 40s and 50s. It was the booms that were unknown.

      PS Who are all these ex-Goldman Sachs bankers appointed Prime Ministers around the world? A name or two, please. And nice quote to finish. How ironic that it came from an American President.

      • Ok Henry. I’ll attempt to take your points one by one. Thanks for the spelling correction by the way. Good to see you were right about something!

        First of all it’s not the Bilderberg Corporation, it’s the Bilderberg group. This group has the wealthiest Business, Finance, Political and even Royalty attending every year. What do you think they discuss? I could go on but do your own research on them. They run your life and you don’t even know it.

        “It’s safe to say they’re not communists” . The Bilderberg group are not communist, you are correct. They are far worse than that. In the case on the EU yes there is plenty of communists.

        Jose Manuel Barrosso, the president of the EU commision was a member of the Portuguese Communist Party and there are a lot more than just him. Just look for the people applauding when he finishes speaking in parliament. Again do your own research.
        “We’ve been particularly badly hit because of the nature of the property bubble that was allowed to float here”. Who do you think allowed it to “float”? I presume its just a coincidence this property crash happened in many countries across the world. Again research the Bilderberg group.

        Going it alone won’t get us very far? it’s called National Sovereignty, and only under those conditions will we get out of this mess. Only when we don’t have communists telling us we have to pay Bank debt. Not just us, our kids and our kids kids. But hey, screw it, we need to stick together right?

        I didn’t say Goldman Sachs employees were appointed around the world. I said indebted countries and i was referring to Europe since that what this conversation is about. (If only you were as good at reading as you are spelling). So in terms of Europe here are the ex-Goldman Sachs employees who hold/have held powerful positions including Prime Minister.
        :
        -Lucas Papademos (Greek Prime Minister. He was appointed and not elected, that probably doesn’t bother you too much cause we should stick together!)
        -Mario Monti (Also appointed Prime Minister, former International adviser to Goldman Sachs)
        -Peter Sutherland (Former attorney General of Ireland, non-executive director of Goldman Sachs)
        -Karel Van Miert (Former EU competition Commisioner, former international adviser to Goldman sachs)
        -Otmar Issing (One of the creators of the Euro, advisor to Goldman Sachs)
        -Mario Draghi (Head of the ECB, ex-managing director of Goldman Sachs)
        -Petros Christodoulou (Head of Greece’s debt management agency, began his career at Goldman Sach’s)

        There’s a few of them anyway… I could go on…. there’s a lot more criminals in powerful positions.Again do some research before you suggest we “strengthen our ties” with these people.

        Lastly, ” like most of their fellow countrymen, have rejected communism and moved on.”

        They have rejected communism??? hahaha you’re so mis-informed i feel a bit sorry for you. You’re saying, ye they were part of the old communist system but have rejected it now, so its cool that they lead us towards total economic, monetary and political union? Our laws are not made in this country Henry! Allowing our independence to be taken and handing it over to 27 unelected bureaucrats who we do not have the power to remove is communism im afraid Henry. Why do you think they openly use the words “The community Method” in parliament? They dis-regard referendums (not just here), and push on with their European project.(Nice, Lisbon). Not very democratic is it Henry??Our politicians simply follow orders from their masters and implement policies that were made at a table they never sat at. All in the hope of one day sitting at that table.

        Yes it came from an American President and these powerful elite murdered him because of that speech.
        “For WE are opposed AROUND THE WORLD by a monolithic and ruthless conspiracy”
        He said this back in the 60′s. What stage do you think this conspiracy is at now??

        and before i go here’s another American President warning of the same thing.

        “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.We must never let the weight of this combination endanger our liberties or democratic processes.”
        I would advise you to open your eyes a bit.

        Your plain view of the world is something I could hear on RTE news and so is this article.

        Peace!

  3. Hi Niall, thanks for the detailed reply, and no need to feel sorry for me, I’ll be fine. Still a bit confused by one or two things though. First of all, you appear to be implying that the EU has been subject to a Communist takeover. I am aware that a lot of our rules now come from Brussels – that’s kind of how a single market works – but I think we must both have a different definition of Communism. For me, Communism would imply efforts to bring all enterprise under state (or in this case federal) control. Instead, EU policy over the last few years appears to be the exact opposite. Also, if the Bilderberg Group is all-powerful as you say, I don’t see how leaving the EU will make things any easier for us. On the contrary, I would have thought that, as a small country with few resources of our own and a long history of electing brazen greedy gombeen politicians, we wouldn’t fare much better than any banana republic you’d care to name.
    Also, if I can say, you appear to be imputing several arguments to me that I have not actually made, nor even believe. I agree the EU is undemocratic and run by bureaucrats, however, if I can use an analogy: if I don’t like the government or political system we have in Ireland, that doesn’t imply the best option is to secede and declare an Independent People’s Republic of Wicklow. The EU is doing poorly at the moment in almost all respects; however, overall I would still argue that membership has been good for Ireland, going back to our accession in 1973. To give three examples, EU structural funds and access to the single market has greatly boosted our economy, while EU employment legislation has benefited millions of Irish workers. As I say (and you, many times ;)), at the moment things aren’t going so well, but the good years outnumber the bad. I can understand the sovereignty argument for leaving the EU (though I don’t agree with it, maybe because I like being European too much), because there are some things you cannot put a price on, but from an economic argument, I cannot agree that we would be better off without.
    I suppose the last question, and the starting point of this blog actually, is the blame game. Ireland is bankrupt, if only it were allowable to admit it, and whose fault is it? While one would be an idiot to think that other European countries and institutions weren’t heaping pressure on the government to bail out the banks in 2008, it was, and is, our government’s job to stand up in this situation and protect our interests. They failed dismally in this. It was our own government in Dublin who took the unprecedented step, which nobody expected, of issuing a blanket guarantee of all bank debt. It is this supreme act of folly more than anything else which has this country in the mess it is in now. So while I recognise the problems Europe has given us in trying to clean up the mess (e.g. Eurozone membership effectively removes both the options of default and devaluation) ultimately, as I said in my first reply to Michael, I think Irish government policy was a bigger cause than the EU.

    PS Another nice Presidential quote. You should forward it to the current incumbent, seeing as how much of the middle east is suffering under the weight of his military-industrial complex.

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