European Commission executive vice-president sees little risk to Irish economy from UK turmoil

There is very little risk of contagion to Ireland from the United Kingdom’s financial turmoil due to the stability of the State’s economic profile, European Commission executive vice-president Margrethe Vestager said in Dublin.

The British pound sterling tumbled to a record low this week while UK government bonds extended heavy losses, stirring expectations of an emergency rise in UK interest rates following British chancellor of the exchequer Kwasi Kwarteng’s package of tax cuts last week.

Speaking at an event hosted by the Institute of International and European Affairs on Friday, Ms Vestager said there were “really interesting” differences between how Ireland and the UK were coping in “such troubled times. It is really interesting to see the differences. Here you have an island with a budgetary surplus, with a budget just proposed — I understand positively welcomed because of the social profile of it, acknowledging the crisis many families are in — with growth, very low unemployment.

“In a very troubled time, Ireland has stability. That is why there is very little risk of contagion. From what we have seen in the UK, that seems to be very UK-specific. That of course is a lesson to take. If you have that stability, the risk of contagion is so much smaller.”

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She credited the presence of the euro as a currency in part for that stability.

“Markets have confidence. Of course, things are a bit more wobbly than they were a couple of months ago, but just imagine if every country had its own currency. The turmoil would be so big, so we should thank a number of the fundamentals for the situation that we are in,” she said.

The commissioner who spearheaded the pursuit of the Apple tax case also said she detected no grudge over the issue during her meetings in Dublin.

Ms Vestager met Taoiseach Micheál Martin, Tánaiste Leo Varadkar and Minister for Finance Paschal Donohoe and she insisted the hospitality on show was “even better” than at the commission’s Berlaymont Building headquarters in Brussels.

She has spoken before of her hope that the commission’s appeal in the Apple tax case will be successful and said on Friday: “That has not changed.”

Europe’s second-highest court ruled in 2020 that Ireland did not give Apple illegal state aid, overturning a previous European Commission decision that the tech giant owed Revenue €13.1 billion in back taxes.

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The Irish Government and Apple had both appealed the commission’s original 2016 ruling in the Luxembourg-based General Court. The outcome marked a setback for Ms Vestager, who has made the tax crackdown a centrepiece of her time in office. The commission later appealed the Apple tax court ruling to the European Court of Justice.

Ms Vestager told RTÉ's Morning Ireland that there is “no strain” in relations from the point of view of the commission over the issue and “If there is a grudge on the other side, I haven’t felt it. But you must ask them.”

The commissioner — who chairs the Commissioners’ Group on a Europe Fit for the Digital Age — said she also engaged with the Government here on digital matters and she said: “Ireland is a high ranking country when it comes to digital.”

Ms Vestager also addressed the war in Ukraine, and described the energy crisis it has exacerbated as “absolutely unprecedented”.

“Everyone is affected by [the war],” she said. “Here in this country people have got new Ukrainian neighbours. Some have new Ukrainian colleagues where they work. The energy market has been weaponised and turned against us … we have the energy crisis going to levels that are absolutely unprecedented. The fact that the most vulnerable are hit the hardest is very important to realise.”