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‘Off Course or On Track? The European Union Amidst Major Economic Challenges’
Check Against Delivery
Introduction
Excellencies,
Directors of the Bertelsmann Foundation,
Ladies and Gentlemen,
It is a pleasure to be here at the Bertelsmann Stiftung today to address the question of whether the EU is on course or off track to address the economic challenges that it faces.
When we worry about being off course, I think many of us immediately think of the crises and shocks that we have experienced in recent times.
Since being elected as President of the Eurogroup in July 2020, Europe has faced two existential shocks: the Covid-19 pandemic and Russia’s war in Ukraine. In addition, Brexit and its impacts have also been hugely disruptive for many of us in Europe, particularly for us in Ireland. Some analysts have used terms such as ‘polycrisis’ and ‘permacrisis’ to describe these multiple shocks. Earlier this month I was invited to deliver a lecture to the students of the School of Social Sciences and Philosophy at Trinity College Dublin and elaborated on this narrative.
I would like to recall that polycrisis has been described by the historian Adam Tooze in the Financial Times as multiple disparate shocks that interact in such a way that the impact of the whole is even more overwhelming than the sum of its parts.
This concept of polycrisis has fed into the idea that here in Europe we are faced by a ‘permacrisis’, selected last year by the Collins Dictionary as its word of the year and defined as an “extended period of instability and insecurity, especially one resulting from a series of catastrophic events".
As we worry about Europe being off course and battered by events into a period of permacrisis, I would like to draw on Ireland’s history to show that, even in times of difficulty and during the deepest crises, there is always an opportunity to make the right strategic choices to stay “on course”.
These lessons from history provide the us with the key to look with optimism and hope at our common future in Europe.
And, I hope my comments will set the stage for my subsequent conversation with Katharina and you, the audience, on the challenges faced by our continent.
100 Years in the World
Looking at Europe 100 years ago, we could argue that we could retroactively apply the concept of polycrisis to the situation at the time.
Countries across our continent were still reeling from the impact of the First World War, which caused such massive human suffering and had lasting impacts on political, economic and social structures.
In Germany, 1923 was marked by hyperinflation, which devastated household savings and plunged millions of Germans into poverty and starvation. In addition to the destruction of the war and the subsequent political instability, the continent had also been ravaged by the deadly Spanish Flu.
In Ireland, 1923 was a difficult year. The independence achieved through the establishment of the Irish Free State in 1922 was accompanied by a difficult economic context and the many complex challenges of building State institutions. In addition, a vicious civil war amongst former comraes poisoned the political atmosphere and divided the country.
Yet, despite the bleak domestic situation, 1923 was also a year of hope and promise for Ireland, as we took our first steps on the international stage.
As I will reiterate throughout my remarks, in spite of, or perhaps because of, myriad immediate crises facing political leaders, they made the right strategic decisions.
Following extensive efforts by our first parliament, the Dáil, to establish Ireland on the international stage, in 1923, we were admitted to the League of Nations.
In his speech to the League on 10 September 1923, the President of the Executive Council, W.T. Cosgrave, spoke of our country’s “solemn covenant” to promote and contribute to “the peace, security and happiness, the economic, cultural, and moral well-being of the human race.”
President Cosgrave also told the League of Nations that Ireland was conscious that “nations are interdependent in matters of economic and intellectual development”. It is an observation that rings truer than ever in today’s globalised and interconnected world.
And in fact, Ireland’s prosperity has been predicated upon being open to the world.
Today, Ireland is a globally interconnected country, with a highly-developed and open-knowledge economy.
The World in Which we Live
The reason I am here in Germany this week is our St Patrick’s Day programme.
On the occasion of our national day, Ireland chooses to reach out and celebrate with our friends across the world and to boost our global connections.
This year, following a number of years blighted by the coronavirus pandemic, 36 Irish representatives will bring Ireland’s message to 74 cities in 44 countries worldwide.
Fifty years ago, Ireland also faced huge challenges with violence, known as the Troubles, raging in Northern Ireland and the world facing economic stagnation.
Again, rather than retreating into itself, Ireland took the decision to look outwards to the world.
Massive popular support, 83 per cent of the electorate, backed Ireland’s accession to the European Economic Community, and in 1973 we opened a new door onto the world stage.
Ireland’s membership of the European Union has utterly transformed our country. Almost every aspect of Irish life has changed for the better. Our work, our capacity to travel and shop have all been transformed. Our learning opportunities and the way our businesses buy and sell their goods and services equally so.
In 1973, Ireland was a poor, largely rural economy, while today we are one of the Union’s wealthiest Member States and a net contributor to the EU.
At the time of our accession, there were some who warned against further economic integration, saying it would damage Ireland’s indigenous economy and undermine domestic business. Their negative prognosis has proven to be completely wrong.
In fact, further economic integration has been key to the success of the European project, from its beginning to today.
A central aspect of this success has been the European Single Market, which is thirty years old this year. It is one of Europe’s finest achievements. The benefits for Ireland of being part of the Single Market is estimated to be worth in excess of €30 billion.
The Single Market facilitates free movement of people, goods, services and capital. It enables market-based competition that delivers greater quality and choice to consumers, and it reduces costs of cross-border trade. Furthermore, it sets the strategic context and regulatory standards for innovation and productivity growth.
Yet, in the face of global challenges we cannot sit back and simply admire what we have achieved through our European Single Market.
Instead, we must constantly seek to optimise and strengthen it to improve the lives of European citizens.
The Right Course
Yet again, in the face of domestic and global challenges, we must take the deliberate decision to set ourselves on the right track to ensure prosperity for our citizens through further integration.
In my role as President of the Eurogroup, I chair discussions in monthly meetings where Finance Ministers from the Euro-area discuss a range of issues from economic prospects, to budgetary policy, to banking and Capital Markets Union to the digital euro, among others.
I also represent the Eurogroup at the European Council where our Prime Ministers convene, and I attend the G7 Finance Ministers’ meetings.
A particular priority for the Eurogroup is to focus on improving coordination of policy measures to ensure a strong euro area economy, and a sustained recovery from the impacts of the shocks I mentioned earlier; the Coronavirus pandemic and the war in Ukraine.
In the short term, this coordination work has been very much focused on energy support measures, and their phasing out or better targeting to the most vulnerable.
In the medium term, we are looking at wider policy priorities, such as maintaining and increasing investment levels so as to drive the green and digital transition.
Indeed, as I have mentioned throughout my remarks, in the past we have always been brave and faced down dark moments and challenges by further opening up to the world.
And that is our duty when looking at further completing the Single Market. This includes progressing the digital euro project, through political guidance to the ECB and the EU Commission, and ensuring the completion of the European Banking Union.
Strength in Strategy
In the past years we have already taken some important decisions to strategically strengthen the European Union’s institutional resilience and response mechanisms to shocks.
Examples include the improvements in supervision and regulation of our banks; or the provision of new credit support lines for our sovereigns, including strengthened surveillance procedures; new and innovative common EU funds -from SURE to Next Generation EU; and unprecedented levels of economic policy coordination.
In the face of these shocks, the institutions of the European Union have worked with national governments delivering real solutions at speed.
This agility and solutions-driven approach has bolstered public support for our euro and European project.
In the most recent Eurobarometer survey (for Winter 2023) 71 per cent of citizens were in favour of the euro; the second highest reading on record.
Regarding our Union, nearly two thirds of respondents were optimistic about the future of the EU. The highest number expressing optimism was in fact in Ireland at 84 per cent.
Yes, we must acknowledge and respond to crises and challenges as they arise. But, we must also maintain a strategic, forward-looking approach to European and global issues.
Before I finish, I would like to mention a final significant date.
Next month, we will mark 25 years since the Good Friday agreement was signed, bringing an end to the violence in Northern Ireland and beyond.
This decision required significant courage, foresight, and courage, from all those who dedicated themselves to building peace, reconciliation and a better future.
Ireland welcomes the recent agreement in principle on a new way forward on the Protocol on Northern Ireland, to be known as the ‘Windsor Framework’, agreed by the European Commission and UK recently. And we hope this opens an era of more positive EU-UK and UK-Ireland relations and closes the chapter of increased tensions in Northern Ireland caused by Brexit.
Conclusion
I will conclude my remarks by reiterating my message on the response to crises.
In the same way that Ireland made the strategic choice to embrace the world through its admission to the League of Nations in 1923 and its accession to the European Union in 1973, Europe must look forward and make the right strategic decisions to maintain competitiveness and provide growth for its citizens.
This will ensure that we retain the support of our fellow-citizens and stay on track to deal with the major economic challenges facing us today. And we will.
Thank you.
ENDS