Kenny: Ireland seeing positive results from austerity programme

Ireland will not require a second bailout to follow the €67.5bn package agreed with the EU and IMF in 2010, Enda Kenny said while on a visit to the UK today.

Speaking during a visit to London, the Taoiseach acknowledged that Ireland faced “very significant economic challenges” but insisted that it was starting to see “positive results” from the austerity programme introduced in the wake of the financial crisis.

Key to the restoration of financial stability will be a “comprehensive solution” to the problems facing the euro, he said.

He was unable to say whether a referendum will be required in Ireland on the inter-governmental pact on new fiscal disciplines for the eurozone, currently being drawn up between 26 EU states after Britain declined to get involved.

A decision on a referendum will be made after advice is received from Ireland’s Attorney General on whether the final text of the agreement is consistent with the constitution, he said.

Speaking at Thomson Reuters in London’s Canary Wharf ahead of talks with British Prime Minister David Cameron in Downing Street, Mr Kenny acknowledged that “we are not yet at a point where market confidence in the euro has been restored”.

“We must ensure that more binding, durable and enforceable fiscal rules go hand-in-hand with funding certainty for countries pursuing sound and sustainable economic policies,” said the Taoiseach.

“We need to keep pushing forward towards a comprehensive solution to the challenges of the eurozone.

“And beyond that, we absolutely must start creating the conditions and environment for a return to economic growth and job creation across the Union.

“Public confidence in, and support for, the euro – and indeed the European Union – will ultimately be determined by how well we deliver on growth and jobs, rather than on institutional wrangling and complex legal or technical negotiations.

“That must remain the ultimate focus – more growth, more jobs, more prosperity.”

Asked after his speech whether Ireland might be forced to seek a second bailout, Mr Kenny responded: “We are meeting all of the targets and all the commitments.

“My genuine belief is that if we can get through the eurozone crisis from a political point of view, we’ve got a lot of engines that can drive our economy, that will restore confidence and get us moving on.

“In that sense I do not share the view at all in regard to a second bailout being necessary.”

Mr Kenny accepted that unemployment levels in Ireland would remain “unacceptably high” during 2012, largely due to a lack of domestic demand.

But he said that Ireland had returned to growth in 2011 for the first time since 2007, and had enjoyed its first current account surplus in a decade. Competitiveness was “improving significantly” and every quarterly review of Ireland’s finances by the troika of the European Commission, European Central Bank and IMF had been “positive”.

“Our progress has been acknowledged by our peers and the international markets and has gone some way to restoring our international reputation,” said Mr Kenny.

“Those positive endorsements are an important underpinning of the credibility of the decisions and actions of my Government.”

Mr Kenny said his Government was "determined... to continue to take the steps necessary to rebalance our public finances, to rebuild our banking system and to generate jobs".

He acknowledged that “austerity is taking its toll on the ordinary people”, but said there was “no magic solution to our very significant economic challenges”.

“They will only be overcome by slow, patient and often painstaking measures to rebalance our public finances, to renew our banking sector and to rebuild confidence in the economy,” he said.

Mr Kenny said he was “disappointed” that Britain was unable to join the other 26 EU states in signing up to plans for an agreement to enhance eurozone fiscal discipline at last month’s summit in Brussels.

But he said he was “happy” that the UK is at the table as an observer in talks to finalise the agreement.

A leak yesterday of the latest draft of the 26-nation pact suggested that Britain was making progress in securing amendments to meet the concerns over the integrity of the single market and EU institutions voiced by Mr Cameron last month.

He added: “Many people are asking if we will have to have a referendum on the new agreement.

“The situation is straightforward. If the agreement is not consistent with our constitution, a referendum will be required. Only when the text is finalised, and the Attorney General’s advice received, will that be clear.

“Either way, the new agreement will be important in substance – Ireland strongly supports measures to improve discipline and to strengthen our ability to enforce the rules. But it will also be a strong signal of our shared commitment to the euro.”

Mr Kenny said today’s visit would help foster an “even closer relationship” between Ireland and the UK, which was boosted by the Queen’s visit to Ireland last year.

The enthusiasm with which the Queen was greeted provided “a fantastic platform from which to begin to build the next phase of the relationship between our two countries”, he said.

The Taoiseach pledged that Ireland will maintain “a respectful, inclusive manner” in marking the potentially sensitive centenaries of events in the War of Independence and Civil War over the coming decade.

He promised to work closely with politicians and members of civil society in the North to ensure that commemorations are conducted “in a spirit of historical accuracy and mutual respect for different perspectives and traditions”.

Mr Kenny said he had experienced “a genuine feelgood factor and confidence in the future” during his recent visit to Belfast.