Support Ireland, Not The Euro

Mark Reckless MP speaking in the House of Commons during the Second Reading of the Loans To Ireland Bill on 15th December 2010



Mark's speech was made following a series of questions in the chamber on the issue of the Irish bail out, starting with a question to the Prime Minister David Cameron during PMQs. These are set out below (courtesy of TheyWorkForYou.com)

Loans to Ireland Bill (Allocation of Time): Loans to Ireland Bill (15 Dec 2010)Mark Reckless: The package is described as a bail-out of Ireland, but it is important that we recognise that Ireland has not asked for the bail-out and that it is not the package that the Irish would have wished. Ireland and the IMF proposed to write down bank senior debt-that is, default on an element of that debt-because they recognised that it would be very difficult, although not impossible, for Ireland...

Loans to Ireland Bill (Allocation of Time): Loans to Ireland Bill (15 Dec 2010)Mark Reckless: All we are doing is passing on to Ireland the quarter per cent. or so of benefit that we gain by being a better creditor than the eurozone. Most hon. Members feel that we should help Ireland, but I agree with my hon. Friend that it is not necessarily helpful to Ireland to have a huge amount of extra debt on top of the great debt it already has. On that basis, I understand his point.

Loans to Ireland Bill (Allocation of Time): Loans to Ireland Bill (15 Dec 2010)Mark Reckless: Will my right hon. Friend confirm that, notwithstanding previous assurances, this loan will not rank pari passu with the EU funds extended under the mechanism, but will be subordinated to them?

Loans to Ireland Bill (Allocation of Time): Loans to Ireland Bill (15 Dec 2010)Mark Reckless: It is enormously welcome that this country is working with Iceland and Ireland to support them in these very difficult times. The Chancellor has mentioned the current 7.5-year swap rate; can he tell us how much higher it is than when he first announced our participation in this bail-out?

Loans to Ireland Bill (Allocation of Time) (15 Dec 2010)Mark Reckless: We may have heard one or two "Hear, hears", and I am certainly someone who wants to speak on Second Reading, but let me make clear my appreciation for what my hon. Friend is doing. Any responsibility for the curtailment of time for Back Benchers should rest squarely where it belongs, which is with those on the Treasury Bench.

Oral Answers to Questions — Northern Ireland: National Asset Management Authority (15 Dec 2010)Mark Reckless: What assessment his Department has made of assets held by the Republic of Ireland's National Asset Management Agency in Northern Ireland; and if he will make a statement.

Oral Answers to Questions — Northern Ireland: National Asset Management Authority (15 Dec 2010)Mark Reckless: Given the difficulty NAMA is having in managing these assets and the Republic's already over-indebted situation, would it not make sense for us to take some of those assets off its hands, as consideration for financial support we may give?

Oral Answers to Questions — Prime Minister: Engagements (15 Dec 2010)Mark Reckless: The BBC reports that the German Finance Minister wants to set an interest rate to punish Ireland. Will the Prime Minister confirm that this country wants to help Ireland?

Support Ireland, Not The Euro

Over A Third Of Irish Want To Leave Euro For Pound

I commissioned top Irish pollster RED C to ask the following question to a representative sample of 1,000 people across the Republic of Ireland between 29/11/10 and 1/12/10:

“In light of the current financial crisis, would you support Ireland leaving the Euro and re-establishing a link with the pound sterling, or not?”.

Over a third of the sample answered ‘Yes’.

Support was strongest among the younger age groups and people with children. A majority of those who have already lost their jobs want Ireland to leave the Euro and return to sterling. Even 43% of Sinn Fein supporters now want to return to the pound (see full results).

In the 1990s I was UK Economist for Warburgs and argued that “the UK and Ireland would be especially badly affected by monetary union with the Continent” with Irish bank lending exploding out of control under EMU (see link1 and link2). The fall-out from that has now caused ruling Fianna Fail to fall behind Sinn Fein, even losing in my grandfather’s old seat in Donegal (Henry McDevitt TD 1938-43).

The EU thinks it can order whoever forms Ireland’s new government to slash spending and hike taxes to bail out the European Central Bank (ECB) and European investors in Irish banks. The EU is also demanding that the Irish people submit weekly reports on what they spend and is imposing an interest rate which is intended to punish rather than help.

Such behaviour by the EU may be a miscalculation because it rather assumes that the Irish have nowhere else to go. That is not the case. Individually tens, and perhaps soon hundreds, of thousands are emigrating to England and elsewhere to escape the Carolingian economic settlement.

Collectively, Ireland wants to renounce its politicians’ self-serving guarantee of senior bank debt but, despite IMF support, this has so far been vetoed by the EU and the ECB. Ireland also needs monetary policy better suited to its economy so as to avoid repeated boom-bust cycles in bank lending under the Euro.

The EU may successfully bully Greece or Spain, calculating that it would be too risky for them to reintroduce their own currency, but Ireland has another option. Already over a third of Ireland want bilateral arrangements with the UK, instead of what is on offer from the EU and the Euro, and that is before the EU measures begin to bite.

Over A Third Of Irish Want To Leave Euro For Pound

Questioning The Chancellor On Ireland Bail-out

From Hansard (22 November 2010):

Mark Reckless (Rochester and Strood, Conservative)
Is not the fundamental problem that Ireland has the wrong interest rate and the wrong exchange rate, and that Irish politicians made a fundamental mistake by joining the euro? Does the Chancellor agree that we must stand and support Ireland, and that should Ireland seek a return to sterling, it must have a seat on the Monetary Policy Committee?

George Osborne (Chancellor of the Exchequer, HM Treasury; Tatton, Conservative)

The first time I met my hon. Friend was when we were both at university together, and he gave a speech about exchange rates and the European exchange rate mechanism. He was absolutely right in his prediction of what would happen shortly thereafter, so it is good to hear him talk about exchange rates here in the House of Commons. I would make this observation: decisions on people's currencies must, as I am sure he would agree, be decisions for the nation state involved. I have made the observation-just because there has been some interesting speculation about this-that much of Ireland's sovereign debt is denominated in euros, which would remain whatever its currency was.

Questioning The Chancellor On Ireland Bail-out

Supporting Ireland, Not The Euro!

Mark Reckless MP today called on the coalition government to allow a full debate on the financial crisis in Ireland.

Speaking in the House, Mark proposed that the British government give the people of Ireland "whatever support is necessary to support an orderly return to sterling" and called on the Leader of the House, Sir George Young, to send out a clear message that not a penny of UK taxpayers' money will be spent on bailing out the Euro.

From Hansard:

Mark Reckless (Rochester and Strood) (Con): May I repeat the request for a debate on Ireland? My grandfather served in the Dail for Fianna Fail, and if he could see it now, he would be turning in his grave. Surely the message from this House to those politicians must be that we will not vote for a penny to bail out their euro, whereas the message to the Irish people must be that we will give whatever support is necessary to support an orderly return to sterling.

Sir George Young: I understand where my hon. Friend is coming from. I repeat what I said to my hon. Friend the Member for Gainsborough (Mr Leigh). The Chancellor of the Exchequer will want to keep the House informed in the light of the discussions that are taking place in Dublin about the support that may be needed, but which, as I understand it, has not so far been requested by the Irish Government. This country has an interest in a stable and prosperous Ireland and, as I have said, we stand ready to do what we can to secure that objective.

Supporting Ireland, Not The Euro!

A Better Option For Ireland

Ireland is being bullied by Euro-zone countries to act in their best interests rather than its own:

• Portugal's finance minister urges Ireland “to do the right thing for the euro and accept a bail-out”;

• Spain’s finance minister tells Ireland to make the “proper decision”; and

• Angela Merkel can’t decide whether to protect German banks, who have over-lent to Ireland, or German taxpayers who would fund a bail out.

Ireland though will act in its own interests - and it has a better option than the two that were open to Greece. The Greeks had to do what they were told by the Germans, or re-establish the drachma.

In the long-term it might be best for Greece to go its own way. In the short-term though the costs of inflation, default and exclusion from the international capital markets would be high, and would only partially be offset by an inflow of bargain hunting tourists.

Unlike Greece, Ireland would not need to re-establish an independent currency, with all the short-term difficulties that would entail. Ireland could simply rejoin sterling and have a monetary policy more suited for Irish needs.

Germany’s Irish loans could be deemed to have been made in sterling, so as to provide a fair return but allow Ireland to start exporting its way back to growth. We would benefit from closer relations with Ireland and keep the spur of Irish tax competition which the EU would snuff out.

Every MP I have spoken to says they would be happy for Ireland to have a guaranteed seat on the Bank of England’s monetary policy committee. This would mean that, unlike before 1979, Ireland as a sovereign country would have a proper say in setting sterling interest rates.

When we raised the idea with David Liddington, our Europe minister, at the Conservative Foreign Affairs Committee yesterday he was positive, if Ireland wants to explore this option. I know the Chancellor will want to help Ireland stand up to bullying at ECOFIN today.

What better way than to let them know they can come back to sterling if the euro isn’t working for them?

A Better Option For Ireland