Our strategy is working in Ireland, and our people are getting back to work.
We are the first country in the euro area to exit such a program and it is a significant moment not just for Ireland, but for Europe.
This crisis has been a test of national governments, of European solidarity and of the European project itself. Today shows that while Europe needs to find answers to its critics, the critics must in turn recognize the real and substantial signs of progress, hard-won by our people.
The decision Ireland has taken to exit the program without any further precautionary credit line is possible because of what we have achieved. Competitiveness has been regained as costs and prices have risen more slowly than those of our trading partners. We have made a budgetary adjustment equivalent to 18 percent of our GDP and introduced significant structural reforms. We have regained the confidence of international investors. We have funds immediately available to us equivalent to our entire funding needs in 2014. Next year, like Greece, we will have a primary budget surplus, which means we are raising more in revenue than we spend on everything excluding debt interest.
But the measure of success I use before all of those is jobs. From a situation where we were losing 1,600 jobs a week during the crisis, we are now creating 1,200. Although unemployment remains too high at 12.5 percent, it has declined consistently from over 15 percent two years ago.
There is no better boost for national morale and no better measure of the recovering health of our real economy and the sustainability of our future.
Job creation is fundamental to our plan of action in Ireland as it must be in Europe. During our EU presidency earlier this year, together with our EU partners we adopted important measures in this area. The establishment of a Youth Guarantee is perhaps the one that most directly addressed the concerns of a rising generation who risk feeling that the future has less to offer them than it did for their parents. It states that we will not let our young people fall into unemployment without making every effort we can to equip them to succeed through hard work.
Of course, the primary task of political leaders is to set the right conditions for job creation, and that includes stable public finances as well as targeted investment.
The example of Ireland shows that there is a difficult but achievable balancing act to be done. Through over 270 individual actions required by the EU/IMF program, and enormous sacrifices from Irish households, we have brought our debt under control and made Ireland a safe bet for international lenders again. This has had to be balanced, however, with significant measures to ensure that the difficult solutions to our legacy of banking debt are achievable and respond to the most basic demands of justice. It has to be balanced with recognition that the sacrifices asked of people in the name of fiscal responsibility must not themselves fatally undermine the real economic growth necessary for any of this to work.
You cannot cut your way to jobs and growth, and you cannot spend your way to solvency. Where there is an undeniable commitment to reform of national public finances, this must be matched with collective European action to ease the burden, especially in terms of breaking the vicious circle of banking and sovereign debt.
I am glad to say that in Ireland’s case that European response has been forthcoming in some important areas. Key terms of the program were renegotiated, the interest rate reduced and a resolution found to the issue of the Anglo Irish Bank promissory note.
However, work remains to be done at a European level. We must complete the project of banking union, involving not just common supervision, but a common resolution framework with an appropriate fiscal backstop and effective deposit insurance arrangements. Greece will have a leadership role on this issue during its forthcoming EU presidency.
If a bank anywhere in Europe can pose a threat to the financial system of all its members, the necessary framework must be in place to respond to that risk. We have set out deliberately to integrate the European economy for the prosperity – and security – of all our people. We seek to realize the benefits together, and we must guard against the risks together.
The people of Ireland have already been working for years, and will be working for many more, to emerge from under the weight of debt recklessly accumulated by a handful of banks, as well as the unwinding of the property and construction bubble it financed.
Through their determination, and with the solidarity of our partners in Europe, we are showing it can be done, and that Europe can rise to the challenges that the global financial crisis has thrown at us. We understand the colossal resolve and sacrifice displayed by the Greek people and we remain ready to support you as you continue to work to exit from your program.
Our determination will not falter now that we are beginning to see results, and nor must Europe’s commitment to shared and decisive action.
* Eamon Gilmore is tánaiste (deputy prime minister) and minister for foreign affairs and trade of Ireland.