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Statement by the Taoiseach on the outcome of the informal Meeting of the European Council, Brussels, 23 May 2012

Dáil Éireann, 6 June 2012

I am very pleased to have the opportunity to brief the House on the outcome of the informal meeting of the European Council on 23 May, and especially to be doing so in the wake of the outcome in last week’s referendum.

The decision the people took last week was another positive step on our road to economic recovery. It was a forward- looking choice that sent a signal well beyond these shores that Ireland is serious about tackling its problems, securing its recovery and charting a clear path to growth.

It removed any lingering doubts about Ireland as a place in which to invest and to do business. It made us more attractive to those who are looking for locations in which to build their businesses and to create jobs.

Ireland already had a excellent offer to make. The decision taken last Thursday strengthens it further. It brings greater security, greater certainty and greater confidence.

I would like to take this opportunity to pay tribute to the steadfastness of the Irish people and to the courage and determination with which they have faced up to the exceptional difficulties we have had to grapple with as a country in recent years.

We have had to take painful decisions that have had real consequences in the lives of real people. It has not been easy for anyone and it has been particularly challenging for some.

But last Thursday the Irish people stood above the fray and pointed to the type of future they want to build together with our partners in Europe.

I can assure them that the Government is keenly aware of the exceptional burden of responsibility it carries as a result.

As I said throughout the campaign, the Stability Treaty will not solve all of our problems, but it is one of the foundation blocks on which our economic recovery will be built.

It greatly strengthens the Government’s hand as we face into another important meeting of the European Council later this month. Building on the informal discussions that took place last month, that meeting will try to forge a real growth agenda for Europe, a necessary complement to the new Treaty.

Ireland will be a fully active participant at that table where critical decisions for all EU Member States, in particular Eurozone members, will be taken.

But part of that agenda, a really urgent part, is also stabilizing the European banking sector.  This is a fundamental part of settling the crisis in the Eurozone and a key aspect to which this Government is committed to working urgently to solve.

The Irish people have made enormous sacrifices to contribute to the economic recovery of Ireland and of Europe.  When I spoke to the many European leaders that offered their congratulations on the referendum outcome, I set this out for them in clear terms. I told them that we now urgently need to turn our collective minds not just to growth, but also to ensuring a solution to Europe’s banking difficulties and to address the related question of debt sustainability.

Ultimately, that must mean severing the link between sovereign debt and banking debt, ending the vicious cycle that continues to allow pressure on one to amplify pressure on the other.

I do not doubt that a comprehensive solution or solutions will be found. Addressing Ireland’s situation must be a part of that.  We know how difficult indeed dangerous the situation can become when the link between the sovereign and banking debt can be allowed to weigh down recovery. Our national experience of that pernicious link counts for a lot as we move to contribute to the solution at a European level. We do not advocate that others follow the path foisted on us.  Of course, experience of the crisis has shown that while Europe does not always move as swiftly as some, including this Government, would like, eventually a consensus is found in favour of progress.  But I firmly believe that the time for action has arrived. We need to solve this issue.

On many occasions we have seen the previously unthinkable become today’s common-place thought.

There will be a solution on banking, of that I remain confident. I hope it will be reached urgently. It may involve the ESM or other European institutions.  It is the result, not the form, that counts. I will work creatively and constructively with partners to bring it about.

And I can assure the House and the Irish people that, together with my colleagues in Government, including the Tánaiste and the Minister for Finance, I will be putting Ireland’s case as strongly and robustly as I can. 

Europe needs a success. Ireland can offer one.

There is a European interest in ensuring that our debts are manageable and that our banking burden is acknowledged and addressed.

Last week’s decision was a strong and positive one for Ireland. It allows us now to move forward and to focus on the growth agenda which was the subject of the informal meeting of the European Council on 23 May and which will be the main focus when we meet again at the end of the month.

Discussion at the informal meeting was, as President Van Rompuy intended, free and open. We did not adopt Conclusions.

There was, however, sufficient consensus to enable the President to identify a number of key themes and issues for the discussion ahead.

Firstly, it was clear that all subscribed to the view that actions aimed at growth must complement and not detract from efforts to ensure fiscal consolidation. There will be no sustainable recovery without sustainable finances.

Secondly, the process of structural reform through the Europe 2020 process must continue. Last week the Commission brought forward it’s most comprehensive ever assessment of where each Member State stands and the steps each now needs to take.

In Ireland’s case, this was a recommendation that we continue to press forward with implementation of our EU/IMF Programme. 

For many others, the Commission pointed to the need to tackle some very difficult and sensitive issues – including pension and labour market reforms - in the interests of building a sustainable future. I strongly urge partners to take these recommendations on board.

Thirdly, President Van Rompuy identified three ‘pillars’ of a growth strategy for Europe.

The first pillar is mobilising EU policies to fully support growth. That means making urgent progress on important legislative proposals such as the Single Market Act and the Energy Efficiency Directive. We need to finalise the European Patent by the end of the Danish Presidency. The Patent is something that Ireland has long supported – it has the potential to significantly reduce costs to innovative businesses. We need to put the last few outstanding issues on this file to bed.

President Van Rompuy also called on colleagues to ensure the full and consistent implementation of existing legislation. This is an area in which Ireland has been pressing forward – our most recent results on the ‘internal market scoreboard’ have been the best we have achieved and this is something we are determined to keep up.

The second pillar identified by President Van Rompuy is stepping up our efforts to finance the economy through investments and better access to credit, especially for SMEs.

EU funds can play an important part in this. In our discussion, many pointed to the role the European Investment Bank could play, and it has been asked to consider an increase of its capital for financing projects across the EU by our June meeting. 

There was also much discussion of the potential of Project Bonds, and a welcome for the recent agreement between the Council and the European Parliament enabling the launch of the pilot phase this summer as a first step.

The Commission is also to report this month on the reprogramming of the current Structural Funds to support growth, jobs and training. We will also discuss at our next meeting how the Union’s new budget – the Multiannual Financial Framework for the period 2014-2020 – can be geared to growth and job-creating policies.

I made the case very strongly at the meeting that we live in exceptional times when exceptional measures are needed. Any new initiatives in the area of financing will be very welcome and will help to create the stimulus that Europe needs. However, they must be focused on those Member States that have borne the brunt of the crisis and where they can have maximum impact. We cannot allow questions of scale and of bureaucracy to determine the shape of our strategy.

There are other issues that arise in this context, including the question of a Financial Transactions Tax. I again made the Government’s position clear. We could not support a measure that placed us at a competitive disadvantage.

The third pillar identified by President Van Rompuy is job-creation. We need to ensure a job-rich recovery in Europe. The Government has already demonstrated the priority we attach to this agenda through our Action Plan for Jobs and the Pathways to Work policy.

President Van Rompuy called for greater prominence to be given to national jobs plans in the Europe 2020 process. He called for better synergy between European and national instruments, including the Structural Funds, in particular to combat youth unemployment.

These issues – mobilising European policies; better financing of the economy; and job-creation – will be at the heart of our discussions when we meet later this month.

Our discussion last month also pointed to the need for a longer-term debate about how to take EMU to a new stage. President Van Rompuy is currently working with the Presidents of the Commission, the ECB and the Euro Group on what the main building blocks of this might be and how the work should be taken forward. He will report back on this discussion at our next meeting.

Ceann Comhairle,

Last month’s meeting of the European Council was an important staging-post ahead of the one that will take place at the end of this month.

There are vital issues at stake – building economic recovery and securing growth. Nothing could be more important, here or in Brussels.

Following the outcome in the referendum last week, Ireland is now in a stronger position to advance and defend its interests. The Government will continue to leave no stone unturned in this regard.

We are committed to an Irish recovery. We are committed to a European recovery. We are committed to a strong and stable euro and to a credible and durable monetary union.

I look forward to participating in a full and active way in the important discussions ahead and I look forward to keeping the House fully informed.