Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I do support the proposal to have corona bonds. That is not a secret. I think I said that a week or two ago. Everyone should know that. It is essentially a mechanism by which we would collectivise European debt solely for the purpose of paying for the cost of the crisis. It could be just health spending or go beyond that to include the money necessary to re-stimulate the economy. As anyone familiar with European issues will know, that would require a change to the European treaties. It is highly unlikely that is going to happen because in order to change the European treaties every country needs to want to do that and some countries need to hold referendums on it. For that reason alternative solutions are being developed. We expect the European Commission to come to us next week with proposals on how we can use the multi-annual financial framework, MFF, the seven-year budget for the EU, and borrowing perhaps by the Commission as a means to do something similar. A proposal has already been developed involving the European Stability Mechanism, ESM, by ECOFIN, the Council of finance ministers. That was approved last week by the European Council.

In terms of the fiscal rules when it comes to the Stability and Growth Pact the break clause, or the get out clause, has been activated. I have always been of the view that the fiscal rules can, or should, be amended, depending on the circumstances that we face. Something that people often miss when we debate the fiscal rules is that the rules are there for a reason. Somebody did not just invent fiscal rules because they thought they would be a great idea. The fundamental idea behind them is that if we are part of a single currency, and of a European Union, sooner or later we have to balance the books. Yes, in times of growth, when the economy is going well, it makes sense to rein in spending, to run a surplus to pay down the debt so that in difficult times, such as the very difficult times we are about to go into, we can borrow, spend and re-stimulate the economy and avoid austerity. Anyone who thinks that the fiscal rules can be got rid of so that countries never have to balance their books, never have to stop borrowing or never have to rein in spending at some point is living in fantasy land and no future Government can operate on that basis.

What the next Government can do is increase spending and borrowing to pay for the crisis, stimulate the economy, get people back to work, get businesses open and get the country going again but at a certain point, when the country returns to growth, one does need to balance the books. No country will survive if it thinks it can base its fiscal policy on always borrowing more, always having a bigger deficit and never balancing the books. That is Zimbabwe, Venezuela, Weimar Germany; it does not work.

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