Enda Kenny (Mayo, Fine Gael)

I am pleased to have the opportunity to brief the House on the outcome of the informal meeting of the European Council on 23 May, especially in the wake of the outcome of last week's referendum. The decision the people took last week was another positive step on our road to economic recovery. It was a forward-looking choice that sent a signal well beyond these shores that Ireland was serious about tackling its problems, securing its recovery and charting a clear path to growth. It removed any lingering doubt about Ireland as a place in which to invest and do business. It made us more attractive to those looking for locations in which to build their businesses and create jobs. Ireland already had an excellent offer to make. The decision taken last Thursday strengthens it further. It brings greater security, greater certainty and greater confidence.

I take the opportunity to pay tribute to the steadfastness of the people and the courage and determination with which they have faced up to the exceptional difficulties with which we have had to grapple as a country in recent years. We have had to take painful decisions which have real consequences in the lives of real people. It has not been easy for anyone and is particularly challenging for some.

Last Thursday, however, the Irish people stood above the fray and pointed to the type of future they wish to build together with our partners in Europe. I assure them that the Government is keenly aware of the exceptional burden of responsibility it carries as a result. As I said throughout the campaign, the stability treaty will not solve all of our problems, but it is one of the foundation blocks on which our economic recovery will be built. Its endorsement by the Irish people greatly strengthens the Government's hand as we face into another important meeting of the European Council later this month. Building on the informal discussions that took place last month, that meeting will seek to forge an effective growth agenda for Europe as a necessary complement to the new treaty. Ireland will be a fully active participant in a process during which critical decisions will be made for all member states, and for eurozone members in particular.

An urgent part of that agenda must be an effort to stabilise the European banking sector. It is a fundamental aspect of settling the crisis in the eurozone and something to which this Government is committed to working urgently to solve. The Irish people have made enormous sacrifices to contribute to the economic recovery of Ireland and of Europe. I set this out in clear terms when I spoke to the many European leaders who offered their congratulations on the referendum outcome. I told them that we must urgently turn our collective minds not only to growth but also to ensuring a solution to Europe's banking difficulties and to addressing the related question of debt sustainability. Ultimately, that must mean severing the link between sovereign debt and banking debt and thus ending the vicious cycle which continues to allow pressure on one to amplify pressure on the other.

I have no doubt that a comprehensive solution or solutions will be found and that addressing Ireland's situation will be part of that. We know how difficult - indeed, dangerous - the situation can become when the link between the sovereign and banking debt is allowed to weigh down recovery. Our national experience of that pernicious link counts for a great deal as we move to contribute to the solution at a European level. We do not advocate that others follow the path foisted on us. Experience of the crisis has shown that while Europe does not always move as swiftly as some, including this Government, would like, a consensus is eventually found in favour of progress. The time for action has arrived. These problems will only be solved when political leaders face up to the responsibilities arising from the crisis and make political decisions accordingly. On many occasions we have seen what was previously unthinkable become today's commonplace thinking. I remain confident that a consensus will be reached on dealing with the banking issues, and I hope it will be reached urgently. It may involve the European Stability Mechanism or other European institutions. In any case, it is the result, not the form, that counts, and I will work creatively and constructively with partners to bring about that result. I assure the House and the Irish people that, together with my colleagues in government, including the Tánaiste and the Minister for Finance, I will put Ireland's case as strongly and robustly as I can.

Europe needs a success and Ireland can offer one. There is a European interest in ensuring our debts are manageable and that our banking burden is acknowledged and addressed. Last week's decision was a strong and positive one for Ireland which allows us to move forward with a focus on the growth agenda that was the subject of the informal meeting of the European Council on 23 May and which will be the main focus when we meet again at the end of the month. Discussion at the informal meeting was, as the President of the Council, Mr. Van Rompuy, intended, free and open, although no conclusions were adopted. The Commission put forward a range of ideas and issues that were discussed and referred to at the meeting, including the implementation of the Stability and Growth Pact, bank restructuring and a return to normal lending, the adequacy of financial firewalls, and new sources of revenue such as financial transaction taxes, energy taxation and measures to combat tax evasion. Needless to say, we did not agree with all of these proposals. There were also proposals regarding steps and conditions for the joint assurance of debt. In respect of structural reforms, there was a suggestion that member states implement EU recommendations as part of the European semester process, and reference was made to the opportunities arising from the Single Market, the single patent, the digital economy, network industries and so on. There was also discussion, in reference to targeted investments, regarding Structural Funds, project bonds, a European Investment Bank capital increase, the future budget of the EU and the cohesion and competitiveness agenda.

Although no conclusions were agreed, there was sufficient consensus to enable the President to identify a number of key themes and issues for the discussion ahead. First, it was clear that all subscribed to the view that actions aimed at growth must complement and not detract from efforts to ensure fiscal consolidation. There will be no sustainable recovery without sustainable finances. Second, the process of structural reform through the Europe 2020 process must continue. Last week the Commission brought forward its most comprehensive assessment yet of where each member state stands and the steps each must now take. In Ireland's case the recommendation was that we continue to press forward with implementation of our EU-IMF programme. For many others, the Commission pointed to the need to tackle some very difficult and sensitive issues, including pension and labour market reforms, in the interests of building a sustainable future. I strongly urge partners to take these recommendations on board.

Third, the President, Mr. Van Rompuy, identified three pillars of a growth strategy for Europe. The first pillar is mobilising EU policies to support growth fully, which means making urgent progress on important legislative proposals such as the Single Market Act and the energy efficiency directive. Plans for implementing the European patent must be finalised by the end of the Danish Presidency. This is something Ireland has long supported as having the potential significantly to reduce costs for innovative businesses. The few remaining outstanding issues in this regard must finally be put to bed. Mr. Van Rompuy also called on colleagues to ensure the full and consistent implementation of existing legislation. This is an area in which Ireland has been pressing forward, with our most recent results on the Internal Market "scoreboard" the best we have achieved so far. We are determined to maintain our strong performance in this regard.

The second pillar identified by Mr. Van Rompuy is the stepping up of efforts to finance the economy through investments and improved access to credit, especially for small and medium-sized enterprises, in which EU funds can play an important part. In our discussion, many pointed to the role the European Investment Bank could play and, in this context, it has been asked to consider an increase in its capital for financing projects across the EU by our June meeting. There was also much discussion of the potential of project bonds, and a welcome for the recent agreement between the Council and the European Parliament enabling the launch of the pilot phase this summer as a first step. I put forward the proposition that these bonds should apply to projects other than transcontinental infrastructure, that is, that they should be applicable in a national context, subject to appropriate conditions.

The Commission is also to report this month on the reprogramming of the current Structural Funds to support growth, jobs and training. We will also discuss at our next meeting how the Union's new budget, the multi-annual financial framework for the period 2014-2020, can be geared to growth and job-creating policies. I made the case very strongly at the meeting that we live in exceptional times when exceptional measures are needed. Any new initiatives in the area of financing will be very welcome and will help to create the stimulus Europe needs. However, they must be focused on those member states that have borne the brunt of the crisis and where they can have maximum impact. We cannot allow questions of scale and of bureaucracy to determine the shape of our strategy. There are other issues that arise in this context, including the question of a financial transactions tax, in respect of which I again made the Government's position clear, namely, that we could not support a measure which placed us at a competitive disadvantage.

The third pillar identified by the President is job creation. We must ensure a job-rich recovery in Europe. The Government has already demonstrated the priority we attach to this agenda through our action plan for jobs and the pathways to work policy. Mr. Van Rompuy called for greater prominence to be given to national jobs plans in the Europe 2020 process and for better synergy between European and national instruments, including the Structural Funds, with a particular focus on combating youth unemployment. These issues - mobilising European policies, better financing of the economy and job creation - will be at the heart of our discussions when we meet later this month. The banking situation will also be part of that agenda. Our discussion last month also pointed to the need for a longer-term debate about how to take economic and monetary union to a new stage. The President is currently working with the Presidents of the Commission, the European Central Bank and the Euro Group on what the main building blocks of this might be and how the work should be taken forward. He will report back on this discussion at our next meeting.

Last month's meeting of the European Council was an important staging post ahead of the one that will take place at the end of this month. There are vital issues at stake in terms of building economic recovery and securing growth. Nothing could be more important, here or in Brussels. Following the outcome in the referendum last week, Ireland is now in a stronger position to advance and defend its interests and the Government will continue to leave no stone unturned in this regard. We are committed to an Irish recovery and to a European recovery.

We are committed to a strong and stable euro and to a credible and durable monetary union. I look forward to participating in a full and active way in the important and critical discussions that lie ahead and I will keep the House fully informed of these discussions as they take place.

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