Statement by the Taoiseach Mr. Enda Kenny T.D.
to Dáil Éireann on the Meeting of the European Council Brussels (23 May 2012)
on Tuesday 22 May 2012
Ceann Comhairle,
I am pleased to have this opportunity to brief the House ahead of the informal meeting of the European Council that will take place tomorrow in Brussels.
President Van Rompuy has convened us at this sensitive time, to give an opportunity for an open and informal debate on how we can move ahead with urgency to boost growth and jobs across the EU.
There is no issue more pressing for our country than that we bolster the successful efforts underway here to create jobs, and develop a sustainable pathway back to growth. All of our painful efforts to adjust are in the interests of securing that renewed growth, securing investor confidence, securing jobs. We need those jobs, we need that growth.
We require a stable Eurozone to deliver that. We want to see some fresh thinking and courageous action at EU level to sustain those goals. That is why I believe tomorrow night opens a very important new chapter. We want to see the EU harness our combined strengths to achieve stability and recovery for the Eurozone, for Europe as a whole, and of course, for Ireland.
This is what our discussions tomorrow night will focus on. The intention is that at this stage we will not take decisions or draw conclusions. Rather, we will have a comprehensive discussion- designed to pave the way politically for decisions at our meeting at the end of June. I intend to be an active contributor to that debate.
I very much welcome this opportunity for what I hope will be a frank and comprehensive discussion. We are confronting a most serious situation in the eurozone and more widely.
If we are to rise to the challenge, our approach must be a balanced one - as the Government has argued time and again, a growth-oriented focus is the essential complement to the efforts at consolidation and reform underway.
The Stability Treaty is a vital component, but it is not the full picture. Tomorrow’s discussion will be important in setting out the other steps that must now be taken. If we emerge with a clear set of common understandings amongst all EU leaders about what needs to be done we will have made important headway.
We are not coming to the table with a blank slate, but will be building on work already done, including in our meetings, in January and in March.
However, there is now new momentum behind the drive for growth, and we need to seize the opportunity to make real and substantial progress.
It is my sincere hope that we have a discussion tomorrow that begins the process of looking ahead to the type of Economic and Monetary Union (EMU) which may serve the euro area and the European Union best over the years and decades ahead.
Growth
Ceann Comhairle,
In his letter ahead of the meeting, President Van Rompuy has called for focus on four elements, or ‘building blocks’ of a growth strategy, consistent with the Commission’s statement of 9 May on ‘Seizing the moment to boost growth’:
The first building block is the pursuit of sound national economic policies within the framework of the European Semester. This now includes the ‘Six Pack’ cornerstone for maintaining a growth friendly fiscal consolidation strategy and for avoiding macro-economic slippages.
President Van Rompuy will invite the President of the Commission to provide a preliminary assessment of National Reform Programmes (NRPs) under the Europe 2020 Strategy that were submitted in April, and look ahead to the package of proposals the Commission will adopt on 30 May, notably their Country Specific Recommendations.
As a party to an EU/IMF Programme of Financial Support, we were not required to submit a separate NRP for 2012. We already undergo rigorous reporting under the Programme and the Commission was of the view that this meets the reporting requirements for the NRPs. However, the Government decided to go beyond our obligations and to provide comprehensive feedback to the Commission.
Our NRP update was submitted in April, along with our Stability Programme Update, and provides a review of progress made under the five headline targets, namely Employment, R&D, Climate Change, Education and Poverty. It also took into account our national response to President Barroso’s initiative on youth unemployment and SMEs.
The second building block highlighted by President Van Rompuy is EU policies bringing added value, following up on his letter of 26 April to which I have already referred. Ireland looks forward to the Commission’s proposals in the second half of the year for a new round of measures under the Single Market Act. This will be an important focus for our Presidency next year.
I particularly welcome President Van Rompuy’s emphasis on the role of external trade as a driver of growth and jobs. The EU is in the process of negotiating major agreements with important partners and we look forward to further progress in this area.
The third building block highlighted by President Van Rompuy is measures improving the financing of the economy. There are now a number of concrete initiatives receiving active consideration – including those highlighted by President Hollande – and I expect this list to grow in the period ahead. Many of the ideas are promising, but each will need to be closely assessed for its potential impact upon this country.
President Van Rompuy mentions in particular that the role of the European Investment Bank could be better mobilized to support SMEs and key infrastructure through an increase in its capital and a strengthening of existing joint instruments. This would be helpful. For our part, we will be working to ensure that resulting funds are available to those who need them most, and that SME access to finance remains a priority.
Insofar as Project Bonds are concerned, we want to make sure that the arrangements are suitable for Member States like Ireland, and that scale of projects is not an obstacle to good investments that can actually deliver real growth and jobs.
Negotiations are ongoing on the EU's Multiannual Financial Framework for 2014-2020. There is already agreement that this should be aligned with the Europe 2020 Strategy, but we will aim to give it a greater focus on growth and jobs. I will be making the point to my colleagues in this regard that we see the agri-food industry as a key and highly dynamic engine for innovation, growth and quality jobs. European investment in this sector remains money well spent.
As we reach the end of the current EU budget, there are also funds that Member States have not been able to use. We need to examine how this can be redirected towards growth. Again, we want the focus to be on those who need them most, and those who can make best use of them, including in tackling unemployment in countries like Ireland that face the greatest challenges.
President Van Rompuy also mentions the difficult issue of a possible FTT (Financial Transaction Tax), which some have suggested as a possible source of funds for stimulus. Our position on this is well-known. We remain opposed to anything that would place us at a competitive disadvantage, as are a significant number of like-minded countries.
The fourth building block highlighted by President Van Rompuy is measures to strengthen job creation, embracing both national and EU policies.
Aside from national efforts here in Ireland, including the Action Plan on Jobs and the Pathways to Work Initiative, President Barroso will inform us of the work the Commission is carrying out with the eight Member States, including Ireland, with particularly high youth unemployment.
A team from the Commission visited in February and met with officials from relevant Government Departments to explore ways to combat youth unemployment and increase supports for small and medium sized enterprises.
As we have no unallocated Structural Funds, the emphasis in Ireland is on any potential to refocus employment programmes to better effect, consistent with the direction set by our Pathways to Work initiative. This includes, of course, learning from what is working well in other Member States.
Longer Term Perspective
Ceann Comhairle,
As well as elaborating upon the broad range of growth-related issues, President Van Rompuy has also encouraged European Council members to engage in innovative thinking.
Given what we have been through as a currency union over the last number of years, we need to give serious consideration to ideas which even up to very recently would have seemed insurmountably difficult to some. These ideas might include, but are not limited to Eurobonds and the possibility of revisiting the mandate of the European Central Bank.
We need to reflect calmly and soberly on what sort of EMU will best serve us in the medium to long term. Engaging in such thinking should provide a positive signal to the financial markets and to our people that we remain determined to do all that is necessary to correct weaknesses in EMU
brought into focus by the current crisis.
Stability Treaty
While we will be focussing on the growth and jobs agenda tomorrow evening, we should not lose sight of the importance of the Stability Treaty on which the Irish people will vote in just over a week’s time.
The responsible budgetary rules set out in the Stability Treaty to which 25 countries have signed up are a critical foundation stone on which we can build sustainable jobs and growth. Fiscal responsibility which transparently holds each euro area Member State to account for the commitments which they are entered into is fundamentally in Ireland’s interest and in the interests of our shared common currency.
Any serious efforts to boost growth and particularly job-creating growth – whether they be national or European – will be fatally holed below the waterline if we do not get our budgetary house in order at the same time.
That is exactly what this Government has been doing since coming to office last year. Growth and stability are two sides of the one coin – on the one side, bringing our deficit under control and on the other side, giving our economy a growth stimulus which will boost our growth rates and job creation. This growth will in turn lighten our debt load, which in turn will encourage further growth.
We need to create a positively reinforcing virtuous cycle of growth, jobs and falling relative debt levels. We have done this before as an economy and a society and it is something we will do again.
Developments in the Eurozone
As would be expected, tomorrow’s informal meeting will also touch upon recent developments in the eurozone.
The current situation in a number of Member States raise real concerns for each and every euro area Member State. Within a currency union we are intrinsically linked to one another and the negative shift in our bond yields in the secondary markets are a most concrete and unwelcome reaffirmation on that.
The situation in Greece remains the most pressing. It is, of course, a sovereign matter for the Greek people, to decide the composition of their next government when they come to vote again next month. However, let me say very clearly that I want Greece to remain in the euro area. And I want Greece to implement the terms of the Programme which it has agreed. Both are important for the stability of the euro.
I would also like to express my support for efforts being made by the Spanish authorities to identify and address issues in their banking sector. As we have seen in this country, getting to grips – no matter how painful – with the banking sector, including insuring that they are properly capitalised, is a prerequisite for emerging from this crisis and returning even to modest levels of growth.
Conclusion
Ceann Comhairle,
Tomorrow’s informal meeting of the European Council will allow EU leaders to reflect freely and openly upon how best we can work together to restore growth and job creation to our Union. There is no more vital task.
I hope we will reach the broadest possible understanding among Heads of State or Government of what needs to be done, so that appropriate decisions can be taken when we meet again next month.
I will continue to take a strong and proactive stance in support of any and every initiative which will deliver sustainable jobs and growth to this country and across the EU.
I will, of course, report back to the House after the meeting.
ENDS.