That weekend back in 2010, when it was finally revealed to us that we would need a bailout, was a dark time for Ireland. I do not think anybody who grasped what it meant was not stricken, or even heartbroken, by the news. Leaving aside the already shocking impact on our incomes, our savings and our pensions, or any consideration of who was to blame – some would say we are all responsible but I believe it was the few rather the many – the specific impact of the bailout on the national psyche was to cause enormous sadness and a sense of national shame that after a mere 90 years of independence we had messed up so thoroughly that nobody would lend to us. We were forced to go begging to the international lenders of last resort. We found out very quickly, however, that we had been bounced into a bailout on very unfavourable terms that were motivated not so much by the desire to make it easy for us to overcome our problems as to save the euro. Nevertheless, we were happy to get the money because our situation would otherwise have been much worse.
This Government has made considerable progress on improving the deal and we hope there will be further progress but, regardless of the nature of the deal, the three year programme is coming to an end. From 15 December we will choose our own lenders on the global bond market. There has been considerable comment about whether we should have secured a precautionary credit line. Some say we should have but others agree with the Government that the climate is benign for making a clean break. Arguments can be clearly made on both sides because either choice will present risks.
What should be celebrated, however, is not so much the choice we made but the fact that we have a choice. It is a long time since Ireland had borrowing choices or any choices because the troika took them from us. That we have a choice makes this a milestone worth celebrating in itself. It is a tribute to the fortitude of the Irish people that we have a choice. They have suffered stoically, if not gladly or willingly, seemingly relentless cuts as the Government tried to get us to the point where we could live within our greatly reduced means.
The Government has made the right choice. It is true that the promise of a backstop would have ensured investor confidence. Why would they not lend if they could do so without risk? However, at some point Ireland is going to have to take off the stabilisers and cycle on our own. Until we do that we will never be able to test the market’s assessment of our creditworthiness. Worse, we might undermine what market confidence we have achieved by admitting that we do not have confidence in ourselves to go it alone. As everybody knows, confidence is the essence of economic recovery and the job creation for which we hope. It is as least as important to us as the bond market’s assessment. Of course there are risks ahead but they will be neither caused nor avoided by this decision. I recognise that the recovery is still fragile and that we will remain highly indebted until growth rates rise sufficiently to put our debts on a downward trajectory. The banks may have problems that require recapitalisation. Only forensic stress testing will tell us what will happen in the future. I believe we are on the road to recovery, albeit at a slow pace, but nobody can tell the future. If we do, however, run into trouble the situation will be very different from that of 2010.
We have proved we are capable of responsible fiscal consolidation. Since then, the really significant change is that the EU has committed itself to saving the euro at any cost. We did not have that before. It has demonstrated its commitment in its bond buying programme. One can assume that, having made the commitment, the EU will collectively bear the pain of saving the euro rather than pass it on in its entirety to recipient countries. If we were forced to go into a future bailout, we would go in with our eyes wide open bearing in mind the poor deal we got the first time. The promise by the EU to save the euro is in itself a backstop for us and every other European country. Why would we put our hands up and say we will pay for a credit line and risk undermining international confidence in us?
The risks I mentioned are largely domestically generated. If Europe as a whole goes belly up, any promise of a backstop or a credit line is completely irrelevant. That is something we cannot plan for. Outside of the doomsday scenario, we have made the right choice. While I am too aware of the many problems we have to deal with, nevertheless I unreservedly celebrate the fact that the country is in a position of having a choice. It would be churlish not to recognise that and I support the motion.