Cameron: Euro move contributed to Irish crisis
Ireland’s financial crisis was partly caused by its decision to join the euro, David Cameron said today.
The British Prime Minister said he did not wish to “speculate” on the country’s plight but described the euro as the “Exchange Rate Mechanism without an exit and that is the problem”.
He said stability and success in the Irish economy was “very much in Britain’s interests”.
So far, there has been no request from Dublin for a bail-out from the European Union (EU).
After making a statement in the Commons on the G20 summit in Seoul, Mr Cameron faced criticism from Labour backbenchers who said Ireland’s problems had been caused by severe public spending cuts similar to those being implemented in the UK.
Toby Perkins (Chesterfield) told him: “For much of the last decade, Ireland was held up by Conservative members as an example of the direction we ought to have been taking our economy in.
“Now, because they followed the strategy that’s largely having the same medicine that you have recommended for this country, they’re seeing markets question their economy, interest rates rising, confidence falling. What lessons have you learned from the situation in Ireland?”
Mr Cameron replied: “The Irish did follow one key New Labour policy, which was to join the euro.
“Fortunately New Labour didn’t have the courage and bravery to follow through their own manifesto.”
Labour former minister Geoffrey Robinson (Coventry NW) told the Prime Minister that Ireland had “been exemplary in every respect in pursuing the course you’ve embarked on and have ended up in the mess they’re in at the moment”.
Mr Cameron said: “I don’t want to make life difficult for the Irish at a time when they are trying to take difficult decisions about their own economy but they did have a consumer boom, property boom, badly-regulated banks – some of the mistakes made by the government of which you were briefly a member.
“They added to that the issue of euro membership – I always think the great lesson from the Exchange Rate Mechanism is that the Euro is the Exchange Rate Mechanism without an exit, and that is the problem.”
Veteran Tory Sir Peter Tapsell (Louth and Horncastle) suggested that Irish banks “because of their potential knock-on effects could pose as great a threat to the world economy as did Lehman Brothers, AIG and Goldman Sachs in September 2008”.
Sir Peter asked: “What view did your colleagues take of Chancellor Merkel’s stated determination not to allow her taxpayers to bail out the gamblers who made great fortunes by taking the risks which have created the present crisis - even if that led to the default of national banks?”
Mr Cameron said the issue of Ireland was not “specifically discussed” at the G20.
“I don’t want to speculate about another country’s finances,” he said.
“I recognise the Irish are taking very difficult action to try and get their own fiscal situation under control.
“And, like the UK, they obviously have very large banks that have got themselves into difficulty and that have to be managed out of this process – and all that we very much hope will take place.”
Tory Mark Pritchard (The Wrekin) pointed out that 40% of UK trade took place within the Eurozone and a stable Ireland was therefore “very much in the UK national interest”.
Mr Cameron said: “Ireland is an enormously important trading partner with Britain. It’s a fact that we actually export more to Ireland than we do to Brazil, Russia, India and China combined.
“Stability in the Irish economy and success in the Irish economy is very much in Britain’s interests.”
