Sutherland emphasises euro's role

THE debate over the introduction of the euro was about far more than monetary union, Mr Peter Sutherland, chairman of Goldman Sachs and former EU Commissioner, said yesterday.

Speaking at the Forfas conference, Mr Sutherland warned that if the project were to fail now, the consequences would be disastrous, particularly for Ireland.

However, he added that wage and lab our market flexibility must be increased. "The perception of the state as the ultimate insurer should also be discouraged. State aids will be frowned on by our EU partners and unless conditional on restructuring and productivity increases, will only reduce the incentive to introduce change."

Mr Sutherland pointed out that the share of our total exports that goes to France, Germany and the Benelux alone was growing and was currently higher than the share of total exports to the UK, which was declining.

"Importantly, however, the sectors exporting predominantly to continental European markets are most high-tech, providing high-wage, knowledge-intensive jobs. They are the growth area in the economy and our future. In contrast, many of the sectors most dependent on the UK market are labour-intensive, providing low-skill, low-wage jobs which increasingly will flow to low-wage countries as the process of globalisation of the world economy continues."

He added that inward investment in these sectors would continue to play an "enormous role" in Irish economic success.

Mr Sutherland also stressed that he "fundamentally disagrees" with the argument that Ireland should stay out of EMU if the UK stayed out. "A decision to remain outside EMU effectively consigns us to membership of a two-state sterling system in which we in Ireland have little or no influence on monetary and exchange rate policy."