Op-Ed Deepening Economic and Monetary Union

7th March, 2019

While Brexit appears to dominate the agenda at EU level, the reality is that many other hugely important policy debates are taking place. A clear example of this is the economic future of the European economy. This will be determined by the initiative that European leaders, including Taoiseach Leo Varadkar TD, commenced in December 2017, on deepening Economic and Monetary Union (EMU).

This really matters for a small, open economy like Ireland and we will play a constructive role in this debate.

How, and to what extent, we deepen EMU is a crucial choice for our country as it will ultimately determine core issues of budgetary and banking policy like deficits and debt levels, public investment and the supervision of financial institutions. Getting the balance right in terms of debt, investment and banking regulation will be crucial, particularly in the event of a future economic shock or downturn.

In December, EU leaders asked Finance Ministers to take this work forward and report back to the European Council in June.  At the end of this month, leaders of the 19 EU Member States that share the common currency, will meet to consider progress.

Over the past few months, while my colleagues the Tanaiste and Minister for Foreign Affairs and Trade, Simon Coveney TD, and Minster of State for European Affairs, Helen McEntee TD, were hosting a series of ‘Future of Europe’ debates and discussions around the country, I and my ministerial colleagues from Denmark, Estonia, Finland, Latvia, Lithuania, the Netherlands and Sweden were meeting, on a number of occasions, to discuss the future of the Eurozone.

Over the course of these meetings it became clear that we agreed on a number of important elements on the architecture of the EMU.   We also found we had a number of common values that I believe strengthen our national position in the future discussions and bring benefits to the people of Europe. This week we published an agreed paper setting out our common vision for deepening EMU.

This engagement is part of the Government’s wider agenda to build and develop new alliances within the EU, following the planned departure of the UK. On certain issues, Ireland will seek to build alliances that revolve around a shared position. However, we are also determined to deepen our strategic relationships with those Member States whose values and outlook we share most closely.

The small, open, liberal states, with whom we have co-authored this week’s paper, are in many ways our natural allies in a post-Brexit EU, not least because, like Ireland, their economic and social model combines a dynamic economy with an inclusive society. This was recently highlighted in the World Economic Forum’s Inclusive Development Index.

As we exchanged views on the future of Europe it became clear that a common thread existed that the future of Economic and Monetary Union is relevant to all and should therefore be discussed and decided by all 27 Member States – and not just the 19 members of the Eurozone.  It was also clear that, as Governments, we need to continue to make progressive reforms at the national level to strengthen our economies and improve living standards for our citizens.  The next EU Budget, of which Ireland will be a net contributor, can help to foster sustainable growth, put in place more effective reforms and help us build a better society and that improves all our lives.

We believe that any changes in the future of Economic and Monetary Union should strengthen economic and financial stability and help in regaining public trust.  That means we should focus on areas where there is greater agreement on what to improve and the timeframe by when that should happen. 

In our view this means that priority should be given to the completion of Banking Union and strengthening the European Stability Mechanism (the EU’s rescue fund). We should also continue our work on completing the Single Market and pursuing an ambitious free trade agenda.

In addition to the Banking Union, progress should also be made on the development of a Capital Markets Union, which has the potential to provide for new and alternative sources financing for Irish companies. The creation of larger and deeper capital markets in Europe, which will be of benefit to our financial services industry, is important too.  This will mean all our citizens can avail of loans and financial services from all over the EU, not just Ireland.

There are different views on how to do this and, while these also need to be respected, it is important that we find a way forward that can set a foundation for further strengthening of the Economic and Monetary Union.    

We know we have challenges ahead, not least those relating to the UK departure from the European Union.  But we have faced challenges in the past and I am confident that if we and our European partners make the right decisions, we can deal with them successfully. 

Working with my colleagues from similar sized Member States who share our liberal, open values, I am struck by how much we have in common and how much we can achieve together once we set the direction.  Changes to the Eurozone are required and are necessary if we are to strengthen the EU and make it more effective for the generations to come.

By building on the progress we have made in recent years and by setting out the common purpose and direction of travel, we can build a stronger Economic, Monetary and European Union that will benefit our citizens, our communities and businesses large and small.