The Euro zone will only finance Ireland if its people vote ‘yes’ but, as the Prime Minister told me at Prime Minister’s Questions, Britain will act as a good friend of Ireland whatever they decide in their referendum on Fiscal Union, and require the EU to respect their decision.
I previously ensured, when Parliament considered the Loans to Ireland Act, that the Treasury term sheet provided for UK financial assistance to continue whether or not Ireland stayed in the Euro.
Enda Kerry describes Ireland’s referendum as being on whether to reaffirm Ireland’s membership of the Euro.
When I commissioned a Red C poll in December 2010 across the Republic of Ireland asking if Ireland should leave the Euro and re-establish a link with sterling over a third said ‘yes’, with the strongest support being amongst younger people.
Others would presumably support leaving the Euro to set up a separate Irish currency, even if that meant inflation and an inability to borrow abroad in the near-term, although it is interesting that even 43% of Sinn Fein supporters prefer adopting sterling to staying in the Euro.
In the House of Commons debate about the Fiscal Union treaty, I discuss the three options for Ireland:
- stay in the Euro on Franco-German terms and pay back the ECB;
- print money in a new Irish currency to replace overseas borrowing; or
- negotiate arrangements to use sterling and the UK banking system