Enda Kenny (Mayo, Fine Gael)

I would be misleading the House if I did not acknowledge that some member states have not yet agreed to some elements of the compact, including the additional funding for the European Investment Bank. Some member states believe the bank should first make better use of the resources that are already available to it. There are concerns about protecting the bank's AAA rating. In my view, these concerns are sometimes overdone. While a top-class credit rating is important, its maintenance cannot be allowed to become an end in itself. It is a means to an end.

President Van Rompuy has tabled the report on strengthening economic union that we commissioned from him when we met at the end of May. His paper reflects the consultations he has had in the intervening period with Presidents Barroso, Draghi and Juncker. He briefed Ministers on its contents at the meeting of the General Affairs Council earlier today. The report is a welcome contribution to what will be an important debate. It is worth noting at the outset that it is not, nor does it pretend to be, a means of addressing the immediate crisis we face in the eurozone. It is an agenda and a roadmap towards a stronger economic union. We will work our way through it over the months and years to come. It should not distract us from the urgent steps that need to be taken to stabilise the markets. In this regard, I believe the time has come to allow the European Stability Mechanism to fund banks directly, thereby taking pressure off Europe's vulnerable sovereigns.

President Van Rompuy's report contains four key elements - an integrated financial framework, or banking union as it has been called; a more integrated budgetary framework with commensurate steps towards mutual debt issuance; an integrated economic policy framework; and a means of ensuring the necessary democratic legitimacy and accountability apply. There is a great deal in the report. I recommend that people should read it. It requires a great deal of careful study and consideration. I would like to offer some initial reactions to it. I welcome the recognition that we need to move towards more integrated financial arrangements, or "banking union" as it is called. It is something I have long advocated. We need integrated banking supervision and common deposit insurance and resolution mechanisms. It will take a great deal of work to advance these ideas. I would like to see an outcome where risk is shared to the greatest extent possible and where the burden of saving banks is removed from taxpayers.

We have already gone a considerable distance towards greater fiscal integration, including through the six-pack and the fiscal treaty. President Van Rompuy is proposing a further tightening in a manner that is consistent with democratic legitimacy. We will have to see the detail of what might be involved here. It is important that he explicitly links progress in this regard with progress towards the future issuance of common debt. The Government has argued for this. The ultimate goal is eurobonds. There are steps that can be taken in the interim, some of which President Van Rompuy points towards in his report. If we move forward, it has to be on both fronts, in step together. I also support the idea of greater economic co-ordination, especially between euro area countries. Towards this end, President Van Rompuy suggests we build on what already exists in the euro plus pact. Again, this is welcome. The fourth essential element of the report is the need to ensure democratic legitimacy and accountability, an indispensable element in advancing this work. We cannot move forward if the people are not with us. In Ireland, we know this better than most.

The meeting this week will offer member states an opportunity to give their reactions to what President Van Rompuy has proposed. I expect it will mandate further work and that the President will be asked to make an interim report when we meet in October, with a final report to come in December. I very much look forward to engaging with my colleagues on this. It is also important that this House is kept fully engaged and informed in the period ahead and I will brief Members on my return.

To reiterate, working on this medium to long-term agenda must be supplemented by efforts to get to grips with the immediate crisis we continue to face. The heads of the eurozone countries will meet over lunch on Friday during which time I expect some of the most immediately urgent issues will arise. In a context in which market pressure has continued to mount on a number of member states, especially Spain and ltaly, I expect we will discuss whether there are steps that can be taken to better manage bond spreads. A number of proposals involving the EFSF, the ESM and the ECB have been floated in this regard. This will not be an easy discussion but it is an essential one and cannot be shirked.

This week's meeting of the European Council will also take stock of the progress that has been made on negotiating the Union's budget for the period 2014 to 2020, also known as the multiannual financial framework, or MFF. The Danish Presidency has made good headway and has set out possible options in a draft negotiating "box" that will now be handed forward to the Cypriot Presidency. I expect the European Council will express its hope that agreement can be found among member states by the end of the year, an ambition I strongly support. There is acceptance that the new budget must make a strong contribution to jobs and growth. The Government sees agriculture and agribusiness as a very important part of this picture and I will make a strong case in support of the Common Agricultural Policy.

It is important that this week's meeting comes forward with a comprehensive and credible package which can address the immediate crisis and can set us on the right path for the future. I look forward to the contributions from Spain, France, Germany, Greece, Italy and the other countries towards dealing with the immediate crisis of banking that afflicts the eurozone, evidenced most recently in the application by Cyprus for bailout funding for its banks. I look forward to playing to a full and active part in the discussions at the meeting and to reporting to the House on my return. I welcome the observations of Deputies from all sides along with their views as to the immediate steps that might be taken by Europe to deal with the crisis that now afflicts us. Nobody wants to go through the summer and the autumn with continued uncertainty in the markets in respect of the eurozone and the euro.

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