Tuesday, 23rd November 2010
Ireland’s calamity is a warning on the euro
[Letter to newspapers, published 23rd November 2010]
The 90-billion-euro bailout of Ireland is a calamity for our friends across the Irish Sea and shows the perils of eurozone membership.
Ireland’s ‘Celtic Tiger’ economy has been left with its tail between its legs. Low interest rates designed to pep up Germany’s formerly sluggish growth acted like petrol on a fire for Ireland and the dangerous credit bubble that was allowed to develop has now well and truly burst.
By strapping itself into the straightjacket of interest rates set by the European Central Bank, Ireland lost the flexibility that could have stopped its problems becoming so severe.
Now, it will have to get approval for its budget plans from Brussels – losing its last vestiges of financial independence.
Of course, Gordon Brown’s mismanagement of the British economy was also shameful. But Britain is a large economy which can cope better with debt and the Coalition’s firm action to reduce our budget deficit has restored the confidence of investors.
Ironically, non-eurozone Britain will now be forced to stump up £7.5 billion towards Ireland’s bailout as the cost to us if Ireland went under would be immense.
Even the European ‘President’, Herman Van Rompuy, now acknowledges the danger that the dysfunctional eurozone could collapse under its debt.
Britain must heed the lesson – stay well clear of the euro wrecking-ball!
