A successful presidency
Ireland’s six month presidency of the European Union drew to a successful conclusion last week at the end of a summit in Brussels devoted mainly to issues settled before it began. Prior agreements on the seven year EU budget, agriculture, banking creditors, the EU-US trade agreement and accession talks with Turkey allowed the summit to concentrate on modest but useful initiatives on youth unemployment and economic stimulus and to reaffirm its running agenda. Outraged reaction to the Anglo-Irish Bank tapes took from this positive impression of Irish competence.
Youth unemployment running at over 25 per cent in many EU member-states is equally scandalous. It will now be addressed by an €8bn package over the next seven years in these states, including Ireland, to guarantee a new job, training or apprenticeships. Given the sheer scale of the problem, flowing from the absence of economic growth, this is modest indeed, even if it is to be front-loaded over the next two years. Such unemployment is a terrible waste of resources, including of public funds already spent on education and training. Political leaders attending the summit are lucky it has not led to even more disaffection and rebellion than has already happened around Europe.
Without wider measures to stimulate growth, the accompanying package activating the European Investment Bank and the EU budget to do more will have little real effect. We are waiting far too long to deliver on the promise contained in the summit’s continuing commitment to fiscal consolidation and competitiveness as generators of growth. The latest figures for Irish growth bear this out only too well. References to the social dimension of this crisis in the summit conclusions is welcome, if frustratingly vague.
Banking union is the current preoccupation of ministers working on deepening the euro zone. The latest agreement shifts the cost of future bank failures from taxpayers to bank creditors, establishing a clear pecking order on who will absorb losses. The Anglo-Irish tapes will certainly reinforce public support for this approach, even if it will make the system more ponderous for depositors. Future work in this area concerns supervision and a resolution mechanism and deposit guarantee scheme, but little progress is expected until after September’s German elections. As yet there is scant progress on breaking the vicious circle between banks and sovereign states which so excited the Government last year.
Such help for Ireland from the European Stability Mechanism appears unlikely before we go back to the markets for financing next year. All the more reason to value the reputational benefits flowing from what has been a competent and upbeat Irish EU presidency in the last six months.