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Monday 29 May 2023 Dublin: 14°C
VIRGINIA MAYO/AP/Press Association Images
Column Ireland’s future lies in Europe, and that means closer co-operation
The euro is essential to our economy and our recovery – and we can’t be left out in the cold, writes Minister for European Affairs Lucinda Creighton.

IRELAND’S ECONOMIC FUTURE lies firmly within the European Union. Future growth and job creation will occur as a direct result of our membership of the European Union. As a member of the EU Ireland and the companies that invest here, have access to a market 500 million consumers. Together the 27 members of the European Union are an economic force. On our own we are insignificant in the face of rising powers in Asia and South America.

Future economic growth can only occur by creating an environment that allows enterprise and innovation to flourish and ultimately create jobs. It is delusional to think that we can achieve substantial growth or job creation in isolation.

The European single market, a market of 500 million people, is the most successful economic project in global history. It has led to growth and job creation in Europe on an unimaginable scale, while providing increased choice and value for consumers. The current economic crisis, while a matter of deep concern, does not take away from that fact.

Now as growth in Europe has stalled, it is time to return to the basic values of the single market and to expand its dynamism to sectors that need further reform. That is the path to future growth. The EU 2020 strategy, championed by Commissioner Máire Geoghegan Quinn, is the blueprint for stimulating growth based on knowledge, innovation and a more sustainable greener economy based on high employment and social inclusion.

‘Ireland is ideally placed’

For the EU, and Ireland as a member, to compete globally we must establish the best conditions for business, ensuring that firms can innovate, restructure and reform themselves quickly. In other words create the optimum conditions for businesses that are adaptable and nimble. This compliments our own ambition to become a world leader in innovation. During the recession it is the companies which have invested in research and innovation that have held their own.

As part of this approach Commissioner Geoghegan Quinn is tasked with the establishment of a European Research Area – the creation of a genuine single market for knowledge, research and innovation by 2014.

This is of enormous relevance to Ireland. We have an adaptable, investor-led economy. More importantly we have a large number of technology companies for whom research is their primary focus. The technology sector is the fastest advancing business model the world has ever known.

Therefore Ireland, with its large number of such companies, is ideally placed to become an attractive hub for international technology companies who wish to take advantage of this expanded single market. We are beginning to see this confirmed with companies such as Linkedin, Twitter, and Google locating their European hubs in Dublin.

Multi-nationals are very important to our economy and we continue to be extremely attractive to them as a result of our EU membership. But for the domestic economy to grow and large-scale job creation to occur we need a healthy SME sector.

Europe 2020 puts entrepreneurs and SMEs at the heart of its innovation and research policies. It aims to remove the remaining barriers to bringing business ideas to the market, while promoting entrepreneurial mindsets among students and researches.

‘Ireland is performing better than most’

European SMEs derive a much smaller percentage of their turnover from exports than SMEs based in competing economies such as the USA and China. Therefore there needs to be a much stronger international orientation of European SMEs in order to compete globally.

Ireland is performing better than most with our major export growth. The biggest SME export growth in recent years has been oriented towards other EU member states. In order to further expand EU exports we therefore need to make the European market more open and easier to navigate for business. Central to this will be the simplification and reduction of red tape which the European Commission is vigorously pursing as part of the negotiations for the next EU budgetary cycle which will kick in during 2014.

The euro is central to all of this. A strong and stable single currency is vital for both investment and exports. I spent two days in Iceland last week. The overwhelming concern within government and business circles there is the severe difficulty of the Icelandic government in attracting inward investment. This is due to the fact that the Icelandic króna is non-exchangeable and non-tradeable. I was told on numerous occasions that relying on a small currency in an open world makes capturing investment extremely difficult.

The transformation of Ireland’s economy from one reliant on an outdated agricultural model, to being one of the technology hubs of Europe, has been largely as a result of the opportunities opened up to us through EU membership and particularly through the single market. For us to emerge from the challenges we now face, it is clear that deeper co-operation with the European Union is simply in our best interests. It is the only logical way that our economy and our country can recover.

Lucinda Creighton is the Minister of State for European Affairs and a Fine Gael TD for Dublin South East.

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