Mr. Nat O'Connor:

I wish to return to the issue of the short term versus the long term. In the short term as I have described, there is considerable fragmentation about who is in the eurozone and who is in the European Union. There are particular risks for Ireland because we are not only small but also peripheral. There is a question of whether our economic strategies as a country are compatible with the long-term direction of the European Union. In the short term we can have it both ways. We are in the eurozone and involved in the conversation about European monetary union and the various institutions there such as the ESM. We are also outside the FTT because it suits us regarding multinational FDI, particularly in our financial services industry. At the moment we can have it both ways, but as there are more countries in the eurozone sharing more of the same rules there is a question of whether we will find ourselves having to make a choice as to whether we are in or out regarding, for example, harmonisation of corporation tax. Rather than having a point ten or 15 years down the road where there is a break point and suddenly we are under massive pressure to change, we should really be looking at the longer-term strategic risk for Ireland of not having an economic policy here that is compatible with the direction of the core EU economy.

In that context, as both other speakers said, institutions matter as do the rules of the European Central Bank. The ECB explicitly does not look at employment and growth, as the Federal Reserve in America does. At the moment it only looks at interest rates in order to control inflation and price stability. It interprets that very narrowly as meaning 2% inflation but in fact a higher rate of inflation would suit Ireland now because of our high level of both private and public debt. The institutional detail matters of the ECB, ESM and other institutions should have the flexibility to benefit peripheral economies like Ireland as well as benefiting the core. That is where I would might a concern that Ireland is outside the FTT.

There is no doubt that our strategic interest is for the UK to remain in the EU and ultimately if every other country in the EU is going to be in the eurozone then we need the UK to be in the eurozone. Ireland has often been positioned as a broker between the UK and other European countries, particularly at a Brussels level. We should certainly be considering our strategic interest in how the UK can be persuaded to stay in the European Union as a central player and ultimately to move into the eurozone. It is unambiguous that is where our strategic interest lies.