Smurfit's boss backs EMU drive

IRELAND should join European Monetary Union regardless of the British position, according to Jefferson Smurfit Group president and chief operations officer, Mr Paddy Wright. Waiting to join with Britain at some undetermined time in the future could result in a serious reduction in foreign investment, higher interest rates, looser fiscal policy and less influence in Europe, he said.

The ideal scenario would be that Ireland would join with Britain on January 1st, 1999, Mr Wright told the Forum 2000 National Business Seminar in Dublin yesterday. But this option appeared to be unavailable. "Ireland should have the vision and the independence to pursue the correct course of joining the EMU regardless of the UK position," he insisted.

If Ireland fails to join, international firms could decide to locate in other EU countries to eliminate their currency risks.

Ireland should work with other EU countries to make a political and financial success of the euro "and thereby ensure the participation of our largest trading partner", he said. "And let us be prepared to handle the worst case outcome of separation," he added.

A collapse or delay in the euro would be fatal, he argued. Recent falls in the value of the deutschmark would be reversed and the fledgling recovery in the German economy would be damaged, he predicted.

"Make no mistake about it in the absence of German economic recovery, it will be very difficult for Ireland to maintain its current level of economic growth," Mr Wright warned.

The good news for Irish companies was that EMU should lead to a liquid bond market similar to that existing in the US, he said. To date, the Irish corporate bond market was underdeveloped and companies were relying too much on borrowing from banks.

The existence of an alternative market would lead to a fall in interest rates, while a more transparent, banking environment and increased competition should reduce bank margins - "good news for industry, if not the banks", he said.