Minister Creighton quizzed on UK Sterling Competitive Devaluation and Need for Eurobonds
On 14th February last the Minister of State for European Affairs, Lucinda Creighton, addressed a plenary session of the European Economic and Social Committee on the priorities of the Irish Presidency of the EU. She was quizzed on the threat to Irish economic recovery from a competitive devaluation of sterling and reminded of her own previous support for Eurobonds as a necessary instrument in Eurozone economic recovery. Manus O’Riordan of the EESC Workers’s Group reports.
At a preliminary meeting confined to Irish EESC members, I informed the Minister of the across-the-board support at the January plenary, for the demand put by a British TUC member to European Council President Van Rompuy, that there should be no concessions made to British Tory blackmail in attempting to renegotiate the UK-EU relationship. She replied that Irish Presidency could not be seen to be lecturing the UK. I responded by arguing that the UK needed to be sharply reminded how privileged a position it held in the EU Single Market, with a freedom of movement for the sterling-euro exchange rate which should not be abused to the point of a competitive devaluation that violated the very principles of the Single Market. I pointed out that the 9% devaluation that had occurred in sterling’s euro value since last August was akin to slapping a 9% tariff on Irish exports, and the Minister acknowledged the validity of that point. Since the subsequent downgrading of the UK’s credit rating, the prospect has worsened still further, to the extent of sterling facing a fall to parity with sterling over the next year, which would be equivalent to the de facto tariff on Irish exports to the UK widening to a horrifying 21%.
At the full plenary session itself, I had been requested by the Workers’ Group to re-state a previously published position of mine: “EESC opinions have repeatedly emphasised the urgency of introducing Eurobonds as an essential mechanism for tackling the economic crisis. I would hope that the Irish Presidency will at last see the implementation of such an EU strategy.”
I reminded the Minister of her own 2011 statements that “the idea of national governments pooling debt instruments could be a positive development” allowing borrowing “on the international markets at sustainable interest rates” and that "the crisis in the eurozone requires brave and unprecedented action. The solidarity involved in a Eurobond system would go a long way to stabilising the markets and ensuring the survival of the euro currency."
The Minister replied that she was realistic enough to recognise that there was not yet sufficient trust established between member states to allow for such a development over the coming months, but added that she remained an enthusiastic supporter of the principle of Eurobonds and saw them as a necessary, but later, component in the stage-by-stage establishment of a single eurozone-wide banking system. A “full and frank exchange of opinions” occurred, to use the language of diplomacy.
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