UK opt-out is a threat to financial sector here
Post-1945 old order has effectively come to an end following EU deal
The Government was warned yesterday that the UK decision to opt-out of new fiscal integration arrangements across Europe could have "serious consequences" for the future of the financial services industry in Ireland.
But the decision by British Prime Minister David Cameron may alternatively have handed Ireland a "vital new plank" towards recovery "if we're smart enough to grasp it", it has also been suggested.
The agreement reached in Brussels last week will likely see a new financial transactions tax apply to 26 EU countries, excluding Britain.
Fianna Fail's finance spokesman Michael McGrath said yesterday that the decision could have serious ramifications for what is a critically important industry here.
"The financial services industry is highly mobile and we cannot allow a situation where London becomes a more attractive base than Ireland because of a new tax," he said.
Financial services firms, mainly based at the IFSC in Dublin, employ 33,000 in Ireland with a target of a further 10,000 net new jobs by 2016.
Financial expert Eddie Hobbs believes that Mr Cameron may have greatly damaged Britain's vital financial services industry, effectively shutting Britain out of the new EU that is emerging.
"It is an opportunity Ireland cannot afford to waste. We are within the same time zone, a short hop from London, speak the same lingo and have a highly skilled workforce ready to go at the IFSC.
Many financial behemoths headquartered their northern hemisphere and European operations in London, largely because it afforded full access to the single market," he said.
The Government, meanwhile, is awaiting a decision of the Attorney General to establish whether a referendum will be required to pass the inter-governmental treaty agreed in Brussels last week.
Conflicting opinion as to the future of the financial services industry here came as the German finance minister, Wolfgang Schauble, yesterday said he was confident that agreements reached at the EU summit last week would solve the eurozone's debt crisis.
Whatever the outcome, it is now certain that Europe has entered a decisive new phase, with the post-1945 old order effectively coming to an end.
More immediately, the view is still prevalent that the latest attempt to contain the crisis -- the forging of a new "fiscal compact" -- may come under strain as soon as the financial markets open tomorrow.
To date the markets have judged the efforts of Europe's leaders to be inadequate or irrelevant to the problem of making good on old debts and generating sufficient economic growth to pay off future debts.
The agreement reached is based on a demand by Germany for legal commitments to maintain fiscal and financial discipline. It effectively binds all members to more austerity at a time when the recession in Europe is predicted to worsen.
The markets reacted with tepid optimism on Friday. European stocks were generally higher, and the euro rose slightly. But the crucial government bond markets were mostly flat.
After what Taoiseach Enda Kenny described as an "exhaustive" negotiating session in Brussels, which started Thursday and ran until early Friday morning, Europe's leaders emerged with an agreement which involves two principal achievements.
Eurozone members who run outsize government deficits will face automatic penalties, and all governments will put balanced-budget procedures of some form in their national laws.
The European Central Bank welcomed the deal but gave no hint that it was prepared to undertake massive purchases of eurozone debt to prop up the region's bond markets, as investors hoped.
The ECB is the only EU institution with an unlimited ability to create the financial firepower to build a backstop capable of ensuring heavily indebted countries have continued access to financing.
Fianna Fail leader Micheal Martin yesterday said that the outcome of the summit had "once again" failed to deal with the underlying causes of the sovereign debt crisis -- that the ECB step in and guarantee a market for issuing new sovereign debt.
He also said the decision of Mr Cameron to opt out "may lead to another crisis, this time impacting on the future of the EU itself rather than just the euro".
Yesterday there was a broad consensus that the agreed pact will work only if it persuades the ECB to assume the role of a lender of last resort. But statements by the ECB president, Mario Draghi, are not encouraging.
Mr Schauble, however, said Europe had always emerged more strongly from crises and that was important for Germany, the EU's biggest economy. "If we act as individual nation states we can at best delay our loss of significance, but we would not be able to prevent it," he said.
Mr Martin also said, on the assumption that the stated Franco/German policy of pushing for corporate tax harmonisation is left to one side, the absence of Britain from key discussions and regulations is a huge threat to our long-term economic prospects.
"They are both our largest trading partner and our biggest competitor. The tens of thousands of jobs dependent on the financial services sector are only part of the areas for concern."