Bollitics - Ireland, the Euro and the future of the EU

[Awol]

Edited to add poll.

New thread created split from the New Government thread as this is a different issue with a wider context than just the UK. Trentvilla

The other bollitics thread is going off topic from slating the coalition into the current politico/economic dogs breakfast in the title above.

If any MOD's have time to C & P the last few pages of that thread into here I'd be grateful and we can then try and contain what will be a big subject to this thread.

Ta in advance.

Not sure those numbers are all accurate or up to date

Found this one which was accurate as at May 2010. It may have changed marginally since then but I can't imagine the difference will be significant.

Now Ireland has gone for the bailout (costing UK Plc a minimum of £7 billion - equivalent of this year's austerity cuts - and that's if the government doesn't offer additional biliateral aid) the markets will surely move on to Spain and Portugal. That will mean more bailouts with money we don't have. Will it stop there, or will the markets keep going up the chain for bigger economies until the truth is finally out and the whole rotten thing collapses?

It seems to me that certain banks are effectively bust beyond saving and the attempt by nation states to prop them up with domestic economies is dragging entire countries down. The markets know it, which is why they won't stop exposing the EU's political fantasy that we can conceal and contain this to save the Euro. Irish independence is the first sacrifice (or victory from a Brussels POV), how many more to become provinces of the Franco-Germanic empire?

On that note has anyone else noticed that one of the unofficial conditions of the Irish bailout appears to be raising their corporate tax rate at the request of France and Germany? One of the main conditions the Irish Govt insisted on before they voted 'yes' for Lisbon was that the EU wouldn't interfere with their tax rates. They lied and now they own the Irish whose living standards are going to be trashed to protect the single currency.

At least they had a say though, shame they didn't bury the EU 'project' when they had the chance.

[peterms]

...has anyone else noticed that one of the unofficial conditions of the Irish bailout appears to be raising their corporate tax rate at the request of France and Germany? One of the main conditions the Irish Govt insisted on before they voted 'yes' for Lisbon was that the EU wouldn't interfere with their tax rates. They lied and now they own the Irish whose living standards are going to be trashed to protect the single currency.

Cowen is quoted in the papers this morning saying that changing the corp tax rate didn't come into the discussion and isn't a condition, which is surprising if true.

As for the single currency, I don't see how it can work as it is, or why the measures now proposed will actually deal with the underlying issues.

[Awol]

Cowen is quoted in the papers this morning saying that changing the corp tax rate didn't come into the discussion and isn't a condition, which is surprising if true.

He has also been saying that Ireland didn't need a bailout for the past two weeks!

Sarko hints...

Nicholas Sarkozy, the French president, said yesterday that while raising taxes will not be a condition of the bail-out, he expects Ireland to raise its corporation tax rate.

"It's obvious that when confronted with a situation like this, there are two levers to use: spending and revenues. I cannot imagine that our Irish friends, in full sovereignty, [would not use] this because they have a greater margin for manoeuvre than others, their taxes being lower than others," he said.

I would bet that there has/will be some serious arm twisting going on behind the scenes, even if it's not publicly admitted.

As for the single currency, I don't see how it can work as it is, or why the measures now proposed will actually deal with the underlying issues.

Agreed entirely and I don't see how these measures can either, in fact the can't because the eurozone's long term stability is a work of fiction without political integration. Entirely innocent people are now being beggared to pay for bankers, who incidentally are still in work and still taking bonuses. It's beyond obscene, it's completely insane.

I said a few pages ago that we should have let them fail and battled through the severe recession/depression that followed. All we've done is postpone and worsen the inevitable collapse imo, destroying whatever wealth we had left in the process. We'll end up owned by the IMF, we're just twelve months behind Ireland. After we go down it will be the USA's turn.

It's the biggest swindle in human history, master minded by the financial sector and politicians who were either in league with them for their own ends, or too stupid to know better. Signing up to the Euro bailout fund in May (Brown's last act) has pretty much put the final nail in our coffin. Delors and the rest knew the single currency would end in crisis but they said it would be a "beneficial crisis", forcing political euro federalism as a fait accomplis. It's galling to know that this was the plan from the beginning.

You asked me if I was "coming over to the dark side" a while ago, well I'm all the way there now and it's time for some radical solutions. I feel vindicated on my personal euro scepticism, but fair play to you for having these bankers sussed a long time ago.

[drat01]

Signing up to the Euro bailout fund in May (Brown's last act) has pretty much put the final nail in our coffin.

What complete and utter nonsense - Jon your power of over exaggeration is now legendary on VT. I remember you suggesting that people took all their money out of the banks when Northern Rock were having problems, you also (like Gideon) were lauding the Irish economy at one stage and suggesting moving money into the Irish banks.

At least in your posts now we are seeing some sort of acceptance on the impact and effect of the world wide banking sector in to the worlds problems rather than the usual rhetoric of blaming Labour.

Gideon is squirming again today because of his previous comments, he has been shown up for his ineptitude (again). The worlds finances have a reliance massively on each other and isolationism is not the way forward. This god awful Gvmt we have, is proving time and time again that its "mandate" is based on lies and deceit, maybe that is a trait of all political people? Maybe they should actually concentrate more on understanding the effects of the massive and vindictive cuts that they, like Ireland did previous, will have on the economy, rather than coming up with bollox about how things they got elected on have no meaning now once they are in the rooms of power

[TrentVilla]

Right, I'm not up to speed with the financial stuff like some in this thread so excuse me what to some may seem a daft question.

The government is currently undertaking huge cuts in public spending which will despite their claims have an impact on public services, these cuts are being made because we are told their is no money left and their is no alternative.

Now, as Ireland gets into trouble we suddenly can manage to find £7b from somewhere, where was it? In Gideon's sock draw?

I totally understand the logic of why we are lending the money and the entwined fortunes of both countries economies, I can see why we are lending them the money. What I'm struggling to see is how this fits with the message of this government that there really was no alternative to the current level of cuts yet we can manage to lend this amount of money.

If it is a case of needs must and not lending them the money would be worse for us, I can accept that, but then doesn't that mean that the government had more of a choice about the depth of the cuts then they have previously told us?

Also, does this mean that the government is going to have to make further cuts to balance out lending this money to Ireland? In addition, given the importance of the British banks to the UK economy, how is this loan to Ireland any different to the loans to the British banks some on the right were so critical of the previous government for?

[Gringo]

Signing up to the Euro bailout fund in May (Brown's last act) has pretty much put the final nail in our coffin.

What complete and utter nonsense - Jon your power of over exaggeration is now legendary on VT. I remember you suggesting that people took all their money out of the banks when Northern Rock were having problems,

AWOL est Eric Cantona - Je palourdes mes cinquante francs!

Many people at the time thought that the banks should have been allowed to fail, or at least deflated in a manner which didn't privatise the profits and socialise the costs of the failure of the banking sector.

Now the banks debts are lumped onto national coffers

Nicholas Sarkozy, the French president, said yesterday that while raising taxes will not be a condition of the bail-out, he expects Ireland to raise its corporation tax rate.

"It's obvious that when confronted with a situation like this, there are two levers to use: spending and revenues. I cannot imagine that our Irish friends, in full sovereignty, [would not use] this because they have a greater margin for manoeuvre than others, their taxes being lower than others," he said.

It's not a laffer curve that would hit the Irish tax revenues if they did push up the corp tax rates, it's a laffer cliff drop. These companies will leave - it's not an idle threat - they're only there because of the tax rate - if it goes up they'll all be off to singapore. Of course at the same time, Gideon wants to cut UK corp tax.

Ireland fears civil unrest as bank crisis deepens

One of Ireland's biggest trade unions warned today that the nation was on the brink of civil unrest as government officials negotiated a multibillion euro bailout for the country's ailing banks.

The Technical Engineering and Electrical Union said further "draconian" public sector cuts of €15bn (£13bn) over four years could lead to street disorder. It urged a campaign of civil disobedience unless the taoiseach, Brian Cowen, calls an immediate election. An emergency cabinet tomorrow will discuss the new round of cuts.

"When the measures being proposed are heaped on top of the €14.5bn cuts already implemented in the last three brutal budgets, life in Ireland will be unbearable," said the TEEU leader, Eamon Devoy. A group of 16 officials from the International Monetary Fund and European Central Bank are staying in Dublin's luxury Merrion hotel, holding talks throughout the weekend with the Irish government and Ireland's central bank.

[Awol]

Signing up to the Euro bailout fund in May (Brown's last act) has pretty much put the final nail in our coffin.

What complete and utter nonsense - Jon your power of over exaggeration is now legendary on VT. I remember you suggesting that people took all their money out of the banks when Northern Rock were having problems,

That was before we decided (wrongly) to bail them all out. As things stand I'd say exactly the same thing today because fiat money is not safe imo. I'm actually in the process of doing it now and buying small amounts of gold and silver, because if as seems likely this all goes tits up over the next few years they are commodities that will retain at least most of their value.

But while we are talking about exaggeration, this is coming from the guy who sneered "little Englander" at anyone with the temerity to suggest the euro and EU project was shaky and a dangerous long term risk. Well guess what, you were spectacularly wrong. How is the UK being committed to saving the Euro (an impossibility btw) in our national interest? This crisis is the EU's King Kanute moment, it just might take a while to play out.

you also (like Gideon) were lauding the Irish economy at one stage and suggesting moving money into the Irish banks.

I don't recall saying that at all, but if I did then when N. Rock was going down the full trans-national extent of the disaster wasn't so apparent as it is today.

At least in your posts now we are seeing some sort of acceptance on the impact and effect of the world wide banking sector in to the worlds problems rather than the usual rhetoric of blaming Labour.

It gets very boring pointing out that many of your accusations are untrue. For the gazillionth time then...I've said all along that the banks screwed themselves, BUT that the last government were culpable for making the impact on UK worse through their banking regulation policy and general economic (mis)management during the boom. That's as true today as it was when I first said it.

The worlds finances have a reliance massively on each other.

Yes they do but the system is utterly flawed and is heading for a massive crash imo. Should the UK look to secure our own future (not that a single politician in Westminster appears to have a clue how to to do so) or stand politely on the side lines, handing over ever more cash we don't have to avoid upsetting our european neighbours (who have already said they won't be bailing out Sterling if we need it!!)?

Wake up and smell the coffee Ian.

[Awol]

Right, I'm not up to speed with the financial stuff like some in this thread so excuse me what to some may seem a daft question.

The government is currently undertaking huge cuts in public spending which will despite their claims have an impact on public services, these cuts are being made because we are told their is no money left and their is no alternative.

Now, as Ireland gets into trouble we suddenly can manage to find £7b from somewhere, where was it? In Gideon's sock draw?

It will have to be borrowed mate. We have to do this because while the coalition talks were ongoing between the Cons and Libs, Alistair Darling signed off on a euro bailout fund to guarantee the stability of any eurozone countries that couldn't pay their debts. He didn't actually have a choice because it was put together behind closed doors by France and Germany, then forced through under Article 122 of the Lisbon Treaty (intended as a clause to coordinate response to natural disasters in the EU) in which we had no veto.

Essentially the Lisbon Treaty means we can't not pay the Irish even if we decided we didn't want to, because we are bound by European law to do so.

As you say it is in our interests to see Ireland safe because of our banks own exposure there, but when Spain, Portugal and others need more money we'll have to pay for them too. There is a very good chance that means more public spending cuts to try and deal with our own deficit.

Referendum please, Dave.

[TrentVilla]

Thanks Awol although I think I liked not knowing better.

So basically we are all screwed totally screwed and the current cuts aren't going to make any difference at all when other nations get their begging bowls out.

You got to love the EU

[Gringo]

As you say it is in our interests to see Ireland safe because of our banks own exposure there

It's not just the debt - Ireland is one of the UK's largest trading partners (third largest in the EU?), so in a roundabout way the £7bn is being pumped into the UK economy though there's probably a more efficient mechanism.

[TrentVilla]

As you say it is in our interests to see Ireland safe because of our banks own exposure there

It's not just the debt - Ireland is one of the UK's largest trading partners (third largest in the EU?), so in a roundabout way the £7bn is being pumped into the UK economy though there's probably a more efficient mechanism.

Ah good, it will come in handy to lend to Greece or Spain.

[drat01]

This is one of Gideon's famous praising of the Irish model from the Times

Link

February 23, 2006

Look and learn from across the Irish Sea

A generation ago it would have seemed ridiculous to go to Ireland for economics lessons. Not any more

George Osborne

A GENERATION ago, the very idea that a British politician would go to Ireland to see how to run an economy would have been laughable. The Irish Republic was seen as Britain’s poor and troubled country cousin, a rural backwater on the edge of Europe. Today things are different. Ireland stands as a shining example of the art of the possible in long-term economic policymaking, and that is why I am in Dublin: to listen and to learn.

After centuries of lower incomes, Irish average incomes are now 20 per cent higher than in the UK. After being held back for decades, the productivity of Irish companies — the yardstick of economic performance — has grown three times as quickly as ours over the past ten years. Young Irish families once emigrated in their millions to seek a better life overseas; these days it is young people across Europe who come to Ireland to find good jobs. Dublin’s main evening newspaper even carries a Polish-language supplement.

Ireland is no longer on the edge of Europe but is instead an Atlantic bridge. High-tech companies such as Intel, Oracle and Apple have chosen to base their European operations there. I will be asking Google executives today why they set up in Dublin, not London. It is the kind of question I wish the Chancellor of the Exchequer was asking.

What has caused this Irish miracle, and how can we in Britain emulate it? Three lessons stand out. First, Ireland’s education system is world-class. On various different rankings it is placed either third or fourth in the world. By contrast, Britain is ranked 33rd and our poor education performance is repeatedly identified by organisations such as the OECD as our greatest weakness. It is not difficult to see why. Staying ahead in a global economy will mean staying at the cutting edge of technological innovation, and using that to boost our productivity. To do that you need the best-educated workforce possible. It is telling that even limited education reform is proving such a struggle for the Prime Minister.

Secondly, the Irish understand that staying ahead in innovation requires world class research and development. Using the best R&D, businesses can grow and make the most of the huge opportunities that exist in the world. That is why it is shocking that the level of R&D spending actually fell in Britain last year. Ireland’s intellectual property laws give incentives for companies to innovate, and the tax system gives huge incentives to turn R&D into the finished article. No tax is paid on revenue from intellectual property where the underlying R&D work was carried out in Ireland. While the Treasury here fiddles with its complex R&D tax credit system, I want to examine whether we could not adopt elements of Ireland's simple and effective approach.

Thirdly, in a world where cheap, rapid communication means that investment decisions are made on a global basis, capital will go wherever investment is most attractive. Ireland’s business tax rates are only 12.5 per cent, while Britain's are becoming among the highest in the developed world.

Economic stability must come before promises of tax cuts. If, over time, you reduce the share of national income taken by the State, then you can share the proceeds of growth between investment in public services and sustainably lower taxes. In Britain, the Left have us stuck debating a false choice. They suggest you have to choose between lower taxes and public services. Yet in Ireland they have doubled spending on public services in the past decade while reducing taxes and shrinking the State’s share of national income. So not only does Ireland now have lower business and income taxes than the UK, there are also twice as many hospital beds per head of population.

World-class education, high rates of innovation and an attractive climate for investment: these are all elements that have helped to raise productivity in Ireland. It is not the only advanced economy to have achieved this uplift. Last week in Washington the new Chairman of the Federal Reserve, Ben Bernanke, told me about the impact that the sustained increase in productivity growth had made in generating prosperity in the US. By contrast, in Britain productivity growth has fallen in recent years and is far behind the likes of the US and Ireland. Indeed, it is one fifth the rate it was when Gordon Brown walked into the Treasury. Poor skill levels, rising taxes, bureaucratic planning controls and chronic overregulation are high on the list of culprits. Britain is being left behind.

Faced with the extraordinary rise of economies such as China, India and Brazil, many European governments seem to have accepted that long-term decline is inevitable. I detect a similar pessimism here. How on earth, people ask, will we ever compete in such a fiercely competitive world? The Chancellor’s answer is to put up the shutters and stick on a path of ever-higher taxation and an ever- growing State. But you cannot shut out the future.

The new global economy poses real long-term challenges to Britain, but also real opportunities for us to prosper and succeed. In Ireland they understand this. They have freed their markets, developed the skills of their workforce, encouraged enterprise and innovation and created a dynamic economy. They have much to teach us, if only we are willing to learn.

The author is MP for Tatton and Shadow Chancellor

In fairness to him the world has changed but a lot of his rhetoric recently is certainly coming back to bite him big style.

[TrentVilla]

Well I certainly look forward to seeing him and his pals put the following part in action;

Staying ahead in a global economy will mean staying at the cutting edge of technological innovation, and using that to boost our productivity. To do that you need the best-educated workforce possible. It is telling that even limited education reform is proving such a struggle for the Prime Minister.

[Awol]

In fairness to him the world has changed but a lot of his rhetoric recently is certainly coming back to bite him big style.

Indeed. Just a month after that article was written the then Chancellor gave his budget speech stating:

"As I have said before mister deputy speaker: no return to boom and bust.

And in new measures entrenching stability today, we will continue to have the strength to take the right long-term decisions."

Makes you wonder why we listen to anything politicians say - ever.

[Risso]

The Irish system was simple. Cut your tax to bribe big companies into setting up in Ireland, then spend the money on houses. Far more houses than you actually need.

[Awol]

Worth noting that Portugal has 26bn of debt to rollover next year, Spain has 128bn and Italy has 264bn (approximate figures in Euros). If/when the markets and foreign creditors say 'non' then is Germany really going to fund that, or will it jump and take more closely matched northern European economies with it?

The Euro is over, the politicians just haven't accepted it yet.

[drat01]

Jon - you are Jon Redwood I claim my 10 Euro note :-)

[Awol]

Jon - you are Jon Redwood I claim my 10 Euro note :-)

Better cash it soon or it will be worth less than Andrex.

[TrentVilla]

I just find it hard to believe they will end up scrapping the Euro, to do so would be admitting the EU has failed.

[Gringo]

I just find it hard to believe they will end up scrapping the Euro, to do so would be admitting the EU has failed.

If you believed the purpose of the EU was a federal state then it would prove it doesn't work without a federal govt. If you believed it was an integrated trading network then the thing still stands up. The fore runner to the EURO, the ERM would allow national govts some flexibility to manage their exchange rate within a band - though as mr lamont found out that doesn't work perfectly either. The single currency is great for companies, not so good for govts.