Mick Wallace (Wexford, Independent)

I would like to speak about the banking crisis and the latest reports from Europe. The French and the Spanish are paying more for their bonds today than they were yesterday. The sooner we acknowledge that things will not continue as they have been, the better it will be for ourselves. If the reports are true, I commend the Taoiseach for challenging Mrs. Merkel yesterday. If the Germans do not agree that the ECB should become a lender of last resort, there is no doubt that we will be staring the end of the euro as we know it in the face. It will be difficult to sustain it in its present manner. Very few economists of any stature in Europe see a bright future for it. It seems that if we do not accept the German model, we will end up in the second zone of Europe - that is the best case scenario - or else we will see the break-up of the EU. The Government seriously needs to think about the €1.25 billion we are supposed to give to more unsecured bondholders on 25 January next. The goalposts are moving in Europe every day. The Government does not need me to tell it what it could do with that money. It would be manna from heaven for Irish society at this stage of the game. Many areas are screaming out for assistance. That €1.25 billion would go a long way towards alleviating some of the misery that is being inflicted on many of the more vulnerable people in our society.

The European project was originally based on the idea of Europe as a family of nations. That is really not the case anymore. It is not feasible for us to think we can be like Germany. Our costs will always be higher than those of the Germans. There are 80 million of them. It is hard for us to match them for productivity. I do not see how we can play in the same league. Initially, the whole notion underpinning the eurozone was that the bigger countries would carry the weaker ones with them. That is not really happening anymore. There is a lack of real labour market mobility. Europe's mechanisms for shifting resources from rich parts of the eurozone to poor parts of it are inadequate. The high cost we are paying for that is the economic failure that has transpired. The youth unemployment rate in Spain is 50% and in Greece is 40%. We have our own difficulties, with 450,000 people unemployed. That figure is probably going to increase. I will conclude by quoting from an article by Larry Elliott in last Monday's The Guardian, which summed it up very nicely:

So much political capital has been invested in the euro project that it is perfectly understandable that policy makers have been desperately trying to buy time until they can piece together a fiscal union to buttress monetary union. There are a number of problems with this idea: it would take time Europe doesn't have to organise; it would involve the weaker countries being dictated to by the strong in an even more direct way than they are at present; it would involve not just years but decades of austerity, and it would mean ignoring the seemingly obvious conclusion that monetary union is – and always was – rotten economics.

Larry Elliott is a serious economic commentator.

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