The UK is fortunate that Tony Blair didn’t get his way on abolishing the pound.
Why? Morgan Kelly, Professor of Economics at University College Dublin, believes that Ireland — which did join the euro — is “no longer a sovereign nation in any meaningful sense of that term.”
Writing in the Irish Times, he says: “By next year Ireland will have run out of cash, and the terms of a formal bailout will have to be agreed. Our bill will be totted up and presented to us, along with terms for repayment. On these terms hangs our future as a nation. … Sovereign nations get to make policy choices, and we are no longer a sovereign nation in any meaningful sense of that term.”
The country is thought to be close to losing its access to international debt markets. Jens Peter Soerensen, Chief Analyst at Danske Bank, a primary dealer in Irish government bonds, has said that “It’s close to a buyers’ strike at this point.”
Open Europe reports that EU Economic and Monetary Affairs Commissioner Olli Rehn will arrive in Dublin later today to hold meetings with Irish Finance Minister Brian Lenihan and the opposition parties to discuss the government’s proposed budget cuts for 2011.
Ireland’s already eye-watering austerity measures have seen the loss of 20% of its economy, while its banking sector remains mired in bad debt and inadequate capital resources.
Membership of the euro currency zone is hampering government efforts to deal with the crisis by preventing a devaluation, which would make exports more competitive in international markets.
A classic Irving Fisher debt-deflationary spiral is underway with tragic consequences for the Emerald Isle.
The UK’s Coalition Government has already signed up to a triple EU regulatory regime for the City of London. It would do well to hang onto as much autonomy as it can. If leaving the EU is not on the agenda, a refusal to be bossed about by Brussels is the next best option.
This article first appeared in our sister publication Devon & Cornwall Online.