News Editorial

Wednesday 28 September 2016

The EU's self-serving analysis is of little use

Published 17/07/2015 | 02:30

European Union Commission President Jean-Claude Juncker
European Union Commission President Jean-Claude Juncker

The European Commission has told us that it did right by Ireland in the cruel but fair bailout which ran from November 2010 until December 2013. The Brussels executive report is right on many points - but alarmingly self-serving on key issues.

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It is hard to argue with the central thesis of the commission's analysis of Ireland's experience of the EU-ECB-IMF €67.5bn bailout. By late 2010, the so-called Troika was Ireland's only resort for borrowings to pay the day-to-day costs.

The bailout terms were extremely tough as spending cuts were front-loaded. But the harsh medicine did work - the Irish economy returned to growth and unemployment fell.

The report authors also correctly pinpoint the reality that the Irish Government and administration did with alacrity those things which it usually does well. Structural reforms, notably in professional services and especially the law, have not been tackled.

But we must stress some notable omissions from this report, especially the fundamental flaws in the governance of the eurozone and the single currency. The one-size-fits-all interest rate played a huge part in fuelling the false property price boom in Ireland.

The unforeseen implications of the free movement of capital contributed to havoc in money markets rocked by a global crisis in financial services. And the judgment that the September 2008 Irish bank guarantee was "with hindsight, too generous" is both limp and infuriating at once.

Unsurprisingly, the report also neglects to mention the vital impact on our recovery of the bounce-back of the US and UK economies after the financial crisis. Without the recoveries of our traditional trade partners Ireland might be in a very different position today. Ireland's recovery was not all about the EU.

The Commission report comes as the Oireachtas Banking Inquiry approaches a conclusion in gathering evidence. The TDs and senators must deliver their verdict by November.

At this point we need total honesty as we try to avoid a repeat of what happened. By that criterion this report from Brussels is of little use.

Irish Independent

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