I am delighted to be here today to speak at your festive get-together, which celebrates the strong business links our two countries share. I know your Council will celebrate its 50th Anniversary next year. Since the Council was founded in 1962, to support the development of business links between America and Ireland in anticipation of John F. Kennedy’s visit to Ireland the following year, much good work has been done in fostering a close working relationship that has been of great benefit to Ireland and indeed to the US.
This commitment to strengthening our ties has never been more important than it is today. From my many trips to the States, I can personally vouch that the welcome I, as an Irish person, receive is always humbling and last May shows that we reciprocate this level of hospitality to our American friends. Organisations such as the Ireland-US Council ensure that the historic links that unite our two countries are built upon to advance business, economic and commercial interests.
To this end, the Council organizes numerous events in Ireland and in the United States. Opportunities for scholarship and student internship programs are to be welcomed and will further develop the close Irish-US bond amongst the next generation.
Irish people recognise and appreciate the important role that US companies play in Ireland’s attempts to return to sustainable economic growth. The US is the single largest source of Foreign Direct Investment to Ireland with approximately 600 companies employing 100,000 people directly in sectors as diverse as Financial Services, Technology, Digital Media, Consumer and Business Services and Life Sciences. These figures emphasise the vital importance of Ireland’s relationship with the US, and the Government is committed to strengthening this relationship for the benefit of both of our countries. Over the past forty-nine years the Ireland-US Council has played an extremely important role in helping to build these business links and cement the long-standing friendship between our two nations.
It is vital that this level of investment is maintained and enhanced to support Ireland’s economic recovery over the coming years. After 3 years of negative economic growth, it now seems likely that Ireland will once again experience positive growth.
My Budget last week estimated that economic growth this year will be 1.0 per cent and 1.3 per cent next year. This is a turn around that the Irish people have worked hard to attain. Policies outlined by my colleague the Minster for Public Expenditure and Reform and I earlier this month as part of Budget 2012 aim to ensure that this hard won progress will be maintained. We aim to provide a solid foundation which will support sustainable growth into the coming years. As I outlined on Budget Day, Ireland can never return to the economy we had before the global financial crisis that gripped us all in 2008. Activity was too reliant on one sector, namely construction, and unfortunately a large number of the jobs lost in this sector cannot be recovered.
The reliance on domestic activity coincided with a large deterioration in Ireland’s competitiveness position. However, our competitiveness has improved dramatically since 2008 and is forecast to continue improving relative to our main trading partners over the coming years. This is underpinned by important structural reforms that will support Ireland’s economic development into the years ahead.
Developments such as this show that Ireland must return to its core strengths that served the country so well in the late 1990s. A small country such as Ireland cannot rely on domestic activity to drive its growth prospects. We must continue to innovate and share with the world the abilities of our young, hard-working and well-educated workforce. My colleagues in Government will continue to ensure that we maintain a business-friendly environment. Our belief is that this strategy will provide jobs for our young people and arrest the emigration flow of the upcoming generation who are leaving Ireland to find work. Figures released earlier this week highlight the task facing us as the unemployment rate remains stubbornly high.
The Jobs Initiative that was launched last May represented the first step of this Government’s ambition in improving employment prospects. One of our key policies was reducing VAT for services in the tourist sector. Ireland has much to offer tourists from our scenic countryside, top-class golf courses, hotels, cultural offerings and of course our Céad mile fáilte that I’m sure you’re all accustomed to. The VAT reduction allowed us to give some stimulus to the tourism sector by reducing its cost base. My ministerial colleague Mr. Richard Bruton TD, Minister for Jobs, Enterprise and Innovation will be launching a follow up to the Jobs Initiative with further proposals aimed at boosting the labour market in the New Year.
All of you here today will be very aware of the sacrifices being made by the Irish people in order to regain our economic sovereignty. The Government is steadfast in its commitment to return the public finances to a stable, sustainable position by reducing the deficit to under 3 per cent by 2015. To meet this objective, difficult choices have been made and will continue to be made. As part of this objective, Budget 2012 introduced consolidation measures totalling €3.8 billion to ensure we meet our deficit target of 8.6 per cent of GDP. We have clearly outlined that further consolidation will be required over the next few years and are confident that this can be achieved hand-in-hand with sustainable economic growth. We have already been on the consolidation path since 2008 and have carried it into 2012. By end-2011, the level of consolidation completed is €21 billion or the equivalent of 13 per cent of GDP. It is important to recognise that a large amount of the heavy lifting has already been done.
The main risk to Ireland’s economic growth prospects and indeed to much of the world’s growth prospects is the continuing uncertainty over the European sovereign debt crisis. I work very closely with my fellow Finance Ministers at regular European meetings and I can tell you that there is a firm commitment to deal with our problems. Ireland has shown the way over the past year that with a sense of purpose and a clearly defined strategy, it is possible for a country to return to growth.
Along with other EU leaders, the Taoiseach was at the EU Council meeting last week. Important progress was made, both on firewalls and on budget discipline - two key elements of the package for Ireland. Ireland has long called for stronger and more convincing firewalls. The headway that has been made is therefore welcome.
The entry into force of the ESM is now being brought forward – the objective is now to have it in place by July 2012, a year early. It has been agreed that the overall ceiling of the EFSF and ESM of €500 billion will also be reviewed next March. Importantly, the requirement for PSI is effectively being removed – again this is something Ireland has long called for through various channels. It was one of the specific issues that I have raised at ECOFIN meetings and was repeated by An Taoiseach last week. The Government is pleased that it has now been agreed. It is very good news for countries like Ireland trying to get back to the markets.
To further increase the firepower available, euro area and other Member States will consider, and confirm within days, the provision of additional resources for the IMF of up to €200 billion ($270 billion), in the form of bilateral loans, to ensure that the IMF has adequate resources to deal with the crisis. We are looking forward to parallel contributions from the international community. On economic governance, we agreed to strengthen our rules to ensure greater stability in the eurozone, building on the Stability and Growth Pact. So, we are retrofitting the monetary union with the necessary architecture.
Euro area Member States are committed, as a rule, not to run structural deficits and will write such a provision into their national law. If they do so, a Member State, in partnership with the Commission, will have to engage in a process to get back on track within a given timeframe. In that context, my Department is already in the process of drafting a Fiscal Responsibility Bill that will be published in the first quarter of 2012.
One of the issues that is important to all of us here today is the international tax system. My Department works very closely with our Embassy in Washington and the IDA in ensuring our perspective is factored in to that discussion in the Administration and Congress, and in monitoring proposals as they emerge. I have undertaken networking trips to the US over the past year to meet with various colleagues and to communicate clearly to them that Ireland is making considerable progress in its economic recovery efforts. I’ve also made it clear to the US business community Ireland’s absolute commitment to maintaining the 12½ per cent Corporation Tax rate. This is a pledge I have reiterated on many occasions to give absolute certainty to the multinational sector who continue to invest and create jobs in Ireland.
While the package that Ireland offers in respect of inward investment continues to be very successful, we have endeavoured in Budget 2012 to further improve Ireland’s offering so as to stimulate more activity and create more jobs. As part of that strategy, I am introducing a "Special Assignee Relief Programme". This policy will allow multinational and indigenous companies to attract certain key personnel to Ireland to facilitate the development and expansion of businesses in Ireland.
Ladies and gentlemen, in my comments today I have referred to the indelible links that unite our two countries and how those ties continue to play an important role here and I’m sure in the US. I have outlined Ireland’s ambitions to recreate a successful economic strategy and the challenges that face us. To date, Ireland has proven itself more than capable in making difficult decisions that will ultimately be to the benefit of all in Irish society.
Once again, I want to thank you for inviting me here today and I wish you all a very Happy Christmas and a prosperous New Year.