Winning a third term as president of the Eurogroup was more than a personal triumph for Minister for Finance Paschal Donohoe, it was a reflection of the fact that Ireland has one of the soundest economies in the European Union. Our public finances are in a strong position to withstand the impact of the Trump tariffs, whatever they turn out to be.
Ireland does, however, have serious challenges ahead in recalibrating our commitment to the EU in the light of a more dangerous world where defence, migration and trade wars are the dominant issues. There is a feeling in some other member states that the backing Ireland got over Brexit has not been reciprocated on security and defence. There is not a great deal of sympathy for our special pleading about the EU response to whatever tariffs Trump does impose.
At an event in Iveagh House last week to mark the Irish presidency of the EU in the second half of next year, Danish ambassador Lars Thuesen was clear that the biggest issue during his country’s current presidency is defence. In light of our pathetic record on defence, Ireland will have to face up to some serious thinking on the topic before our presidency begins.
That said, Donohoe’s re-election to head the Eurogroup for a third time shows that there is still a great deal of goodwill out there for Ireland as long as it takes its responsibilities seriously.
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Presenting Donohoe with the highest order of the Légion d’Honneur recently, former French finance minister Bruno Le Maire remarked that in 2020, the Irish Minister was first elected as president of the Eurogroup despite the opposition of a fierce group of countries led by – guess who? – France.
Le Maire added that at the time he believed it would be better for the Eurogroup to be led by a southern country. “I was wrong. Not only because Ireland was an excellent choice, but also because you have some features of a minister from the south: you do not believe in austerity, you are pragmatic, and you have quite a warm personality.”
Some big member states were reported to be a bit dubious about giving Donohoe yet another term, but in the end they backed off. It was a signal that Ireland can still punch above its weight – but that indulgence will come to a rapid end if we prove incapable of delivering on the big issues during our presidency.
The same applies at a domestic level, where action is urgently required to deal with a range of issues, particularly infrastructure and housing. These are actually the problems of prosperity and the resources are there to deal with them if the political will exists to confront the array of vested interests blocking progress.
Ireland’s prosperity is reflected in the latest census figures, published in the past week, which show that the population of the island has risen above seven million for the first time since before the Famine. The bulk of that increase has taken place south of the Border, with a 31 per cent increase in population between 2002 and 2022.
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This rise reflects the remarkable growth in the Irish economy since the beginning of the century, despite the setback of the 2010 financial crisis. All of the parties who have participated in government – Fianna Fáil, Fine Gael, the Labour Party and the Greens – can take some share of the credit for the remarkable recovery in the years since the crash. This recovery has manifested itself not just in the figures for economic growth but in real improvements in living standards for the people of the country. For instance, on the most basic level of all, life expectancy has increased by six years on average since 2000 and now stands at 82.7 years, compared to 76.5 years in 2000 and 70 years back in 1960.
The rapidly rising population, improved life expectancy and higher living standards give the lie to the “failed state” narrative. Yet it still holds sway among many commentators who cannot bring themselves to admit that Ireland is no longer a poor country but a prosperous one, with all the problems prosperity brings.
What a contrast with our nearest neighbours in the UK where Keir Starmer’s government is finding it so difficult to get the public finances in order. Just this week the Office for Budgetary Responsibility (OBR) in the UK delivered a truly grim economic outlook, warning that the debt-to-GDP ratio is approaching 100 per cent with a budget deficit of 6 per cent.
The contrast with Ireland, which last year recorded a budget surplus of €23 billion, could not be greater. While this figure included the once-off Apple payment of €13 billion, the exchequer is on course to record another healthy budget surplus this year.
While we are certain to face more testing times ahead with Trump’s tariffs, and his efforts to get US firms to relocate their manufacturing operations to the US, Ireland is starting out from a position of strength which should give Donohoe and his colleagues the time to adjust to whatever the future holds.
