Dr. Murphy, Dr. Manning, Dr. Halpern, President Barroso
Ladies and Gentlemen
Like others, I wanted to express my thanks to President Barroso for coming here this evening, but also for all he has done for Ireland over the years as President of the Commission. We often say that the Commission is the friend of small member States. Well, Jose Manuel is the very personification of that, both personally and officially.
As I listened to you [President Barroso] speak, I was struck by how well you understand the issues facing Ireland and the Irish people. You spoke of your aim of a job-rich future for young people here. You referred to tackling unemployment as a matter of urgency for the sake of our future, our prosperity and social cohesion. I agree that this is the real priority. For me, unemployment has always been the most pressing challenge, and the one that has most energised the Irish Government since we took office in 2011.
I also agree with you when you draw attention to the role that universities have in developing the knowledge-based digital economies of the future, and the huge potential of the digital economy to create new jobs.
You mentioned that Ireland’s experience and expertise in responding to the economic crisis may have lessons which others could learn from. You know we successfully exited the EU-IMF programme on 15 December last, and did so without the need for a pre-arranged backstop. So, how did Ireland get back on the road to recovery? And, perhaps of greater interest here to you today, what did we learn?
I wanted to say a few words here about the social and political dimension of our response to the crisis. Because, although the details of every crisis and of every remedy have to vary from the country to country, the greatest challenge for any democratically-elected government in such situations is to bring the people with them down such a long and difficult road.
When my Government took office in 2011, we realised that we could not simply make decisions, and presume public compliance and support. The implementation of our recovery plan required much more than that; it required more than acquiescence. It needed the active support and cooperation of the public at large – often evident more in grim determination than in cheerful enthusiasm for the hard choices made.
The steps we took – the “what we did” – are well enough known.
- We restructured the Irish banking system, addressing the bad banks and the bad loans.
- We took measures to stimulate domestic demand in the short term
- And we had to get the public finances back on a sustainable track, and implement a budget adjustment of €30 billion – some 18 percent of our GDP.
But sometimes knowing what to do is not the hardest part. Implementing it is often harder. And this brings me back to what I said earlier about the greatest challenge for any democratically-elected government being to bring the people with them. This is true for all democratic governments – that real change requires more than keeping up numbers in parliaments or in opinion polls. It requires true social solidarity.
It was clear right across Europe during this crisis that social cohesion, social solidarity and the informed consent of the people are vital assets.
Our experience in Ireland is that this is done by confronting challenges head-on rather than delaying; by being upfront and direct with people on the scale of the problem – and the cost of the remedy; and it is done by bringing everyone in society along. This meant applying a sense of fairness and justice to all government policies – financial and economic ones as well as social ones.
And so, despite all our difficulties, we have sustained a strong sense of social cohesion in Ireland. This has afforded us the industrial and the political peace needed to introduce difficult reforms and make structural changes in order to improve our competiveness.
Industrial peace in the public sector, for example, has allowed us to make progress in tackling our public expenditure problems.
Social cohesion is not the whole solution to our crisis. But it has allowed us to drive forward our agenda, to create the conditions for jobs and growth.
Of course, we also had outside help. The EU/IMF assistance programme, the ECB’s policies and other EU and bilateral supports gave us the breathing space we needed to check the crisis, and to work our way out. We are grateful to our friends for this.
And like any small, open, trading economy, to some extent we will sink or swim on the basis of the performance of the economies of our trading partners. For this reason, the importance of Ireland’s reputation abroad, both in European capitals and further afield, cannot be overstated. The work of convincing investors and political leaders in other countries that Ireland is a sound place to invest and to do business was undertaken strategically and determinedly.
Looking ahead at 2014 and beyond, the most important common challenges are clear enough to all.
Working together in the European Union, we must sustain the economic recovery, increase employment and address social inequality. This means tackling youth employment. It means ensuring that there is no generation lost to this crisis. This is real because it affects people at the most basic social level. It is also about the fundamental European principles of solidarity and respect.
We must ensure stability in the Eurozone and the EU financial sector. We must enhance the Single Market, especially in the digital sector as President Barroso outlined in his address. We must reduce administrative burdens and facilitate trade, including through EU external trade agreements. We must meet climate change and energy challenges.
And, finally, we must address the high levels of public disaffection with the EU, including by responding to growing public concern regarding migration and the debate in some Member States on their future in Europe. This is not just about better communications. It is about the fundamental principles that bind the Union together. I know this is a key focus of the Commission.
All of these are common challenges for all Europeans, and the year ahead will be complex.
Firstly, 2014 will see Parliament elections and a new Commission, as well as new presidents of the European Council, Commission and Parliament.
New inter-institutional working methods are needed. And the tensions between arrangements for a European Union of 28 Member States and those for a Eurozone of 18 – as well as between the intergovernmental and the Community Methods – will continue.
The new economic governance arrangements for Member States also need to bed down. For example, national ownership and active peer review have yet to take off, and public awareness of this new process is low.
Dealing with all of this will take time and effort, careful preparation and fair compromise. But not all of what we must do together in Europe is long-term or medium-term. Some of it is right now; this year, not next.
We need to reinforce the recent, hard-won and often still fragile stability that we have in the financial markets. Negotiations on Banking Union need to be completed. We need implementation of the Single Supervisory Mechanism and the Single Resolution Mechanism. We need to have arrangements for direct bank recapitalisation. For Ireland in particular, this is unfinished business.
But all Eurozone Member States have an avowed shared interest in ensuring that mistakes and misconduct by banks can never again undermine the stability of the sovereign. This link must be broken.
For all of this work, we in Ireland will look to the Commission as a key partner, a driver of reform, and a good friend.