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Enda Kenny arriving at today's event Dominic Lipinski/PA Wire/Press Association Images
Enda Kenny

Read: Full text of Enda Kenny's speech on Ireland's future

The EU, the bailout and the banks – here’s what the Taoiseach had to say…

TAOISEACH ENDA KENNY is in London today to meet with UK prime minister David Cameron. He also gave an address at a Reuters event in the city, to an audience of journalists and observers. Here’s what he had to say in full:

It is a great pleasure for me to be here with you in Reuters today.

It is a pleasure for me too to be back in London.

When I was here in April, I and my Government had been just five weeks in office. Back then, my visit included meeting with Prime Minister Cameron, with members of the business and investment sectors, and with representatives of the Irish community in Britain.

Today, my visit will include meeting with Prime Minister Cameron, with members of the business and investment sectors, and with representatives of the Irish community in Britain.

So, perhaps, you might think little has changed in the past nine months.

Well, in some respects, that may be true. The eurozone crisis lumbers on. The economic situation remains very challenging, both here and at home. Austerity is taking its toll on the ordinary people.

But, in other respects, we have seen some very remarkable developments, in a relatively short period of time. British-Irish relations. It would be remiss of me, today, not to highlight the spectacular success of Queen Elizabeth’s visit to Ireland last year.

It might be easy to miss, or to dismiss, the significance of this visit. After all, what could be more normal, more ordinary, than a visit by a head of State to a neighbouring country. But that would be to ignore the long and troubled past that lies behind the relationship between our two nations. A past that, happily, no longer dominates or dictates the terms of that relationship.

Suffice to say that this was the first visit by a reigning British monarch in 100 years.

The build up to the visit was one of eager anticipation, tinged with just a hint of anxiety. But the build-up was and remains outstripped by the memories. For some, they are memories of a respectful, dignified monarch paying her respects not only to the many Irish who died fighting in British uniforms in the two world wars, but also to the many who died in the struggle for Irish independence.

Others will have memories of an audience gasping in admiration when, at a banquet in her honour, Queen Elizabeth began her address with some carefully chosen, and impeccably articulated, words in the Irish language. And perhaps most will have warm and vivid memories of her laughing heartily as she chatted with stallholders at the English Market in Cork.

For all the anticipation, and indeed a little anxiety, the visit was perhaps most remarkable precisely because, in the end, it felt so normal. I think that I can safely say that the Queen endeared herself to many, many Irish people during her visit.

Looking forward, I am confident that the visit represents a fantastic platform from which to begin to build the next phase of the relationship between our two countries. The Queen’s visit is also important in the context of a decade of important centenary commemorations of key historic events, which will begin later this year.

We intend to mark those events in a spirit of historical accuracy and mutual respect for different perspectives and traditions. Whether it be the struggle for Irish independence, resistance to Home Rule, or some of the most tragic battles of the First World War, I am confident that we can and will be able to commemorate these events in a respectful, inclusive manner.

We will work closely with the political representatives and members of civil society in Northern Ireland in this important endeavour. Our relations with Northern Ireland have never been better and continue to develop steadily. The next couple of years will be particularly important in terms of how today’s Northern Ireland is perceived internationally.

The opening of the Titanic Quarter in Belfast this year and the eagerly awaited start of Derry’s tenure as the UK City of Culture in 2013 will attract huge international attention. The vision and energy of the people behind these two major projects symbolises the significant regeneration that is taking place in Northern Ireland.

On my recent visit to Belfast, where I met many people from both sides of the community, I had first-hand experience of a genuine feel-good factor and confidence in the future that have their origins in the peace and stability that has transformed Northern Ireland.

These are issues that Prime Minister Cameron and I will be talking about when we meet later this morning, in the context of the even closer relationship that I want to see develop between our two countries.


But of course our relationship goes beyond the bilateral. We are partners in Europe where we share many interests and goals. Ireland and the UK strongly support the single market as the means to drive European economic recovery, jobs and growth.

We are committed to making it easier for businesses, especially SMEs, to operate at home and throughout the Union. We want an EU fully engaged in the wider world, open to trade and closed to old-style protectionism.

We are friends and we are colleagues. Although our starting points are very different, we are both determined to move the Union beyond the current economic crisis and back on to the path of recovery and growth. How to achieve this will be a key issue on the agenda when I meet Prime Minister Cameron today.

We will discuss progress on the new ‘Agreement on Reinforced Economic Union’ on which good progress is being made. As I said in December, I am of course disappointed that it wasn’t possible to find a basis on which to proceed at 27.

But I am happy that the UK is at the table as an observer. In this, as in all areas of Union life, Britain has an important contribution to make and, as Prime Minister Cameron has made clear many times, resolving the crisis in the euro area is a vital concern for all EU Member States, not just for those that share the currency.

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.

It will be important, but not sufficient on its own. We also need to demonstrate that our determination to do what is necessary to stand behind the currency is underpinned by deeds as well as words. That means having what it takes to withstand the pressures we currently face and those that may present themselves in the difficult period ahead.

In December we took a number of important decisions aimed at strengthening our firewalls. These included:

Increasing the amount of funding available. Bringing forward the date for introduction of the European Stability Mechanism (ESM).

Making it clear that Private Sector Involvement – PSI – is unique to the Greek situation and will not now apply under the ESM.

The latter was of particular importance to Ireland as the continuing prospect of PSI, however remote, was a real obstacle to my Government’s intentions to return to the markets at as early a date as possible.

These measures have, in turn, been underpinned by coordinated action by major central banks and the provision of longer term ECB funding to the banking sector.

This represents significant progress, but clearly 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.

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.

For a small, open economy like ours in Ireland, the European and global outlook is vital to our future prospects.

That is not to ignore the important decisions and actions that we must take – and that we are taking – at home. There was no magic wand waiting for me on my desk when I became Taoiseach. And there is no magic solution to our very significant economic challenges.

Rather, 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.

I believe that, in the ten months that my Government has been in office, we have taken credible, decisive and effective action to deliver both on our own economic commitments and on the requirements of our EU-IMF funding programme.

We renegotiated the terms of that programme to avoid having to increase income tax.

We protected our 12.5% rate of Corporation Tax. We put in place measures to help trigger activity in our deeply subdued property market (such as incentives for first time buyers and adjustments to Capital Gains Tax).

Our budget deficit for 2011 was better than the target set under the EU/IMF programme and we have adopted a budget that will see us meet our 2012 target of 8.6%.

When the 2012 Budget package is taken into account, Ireland will have implemented consolidation measures amounting to in excess of 15% of GDP since 2008. We have set out, in unprecedented detail, where we intend to achieve budget savings in future years.

We secured reduced interest rates on the programme funding and by doing so, greatly improved our debt sustainability position. I am pleased that the British Government agreed to reduce the margin on its bilateral loan to Ireland following announcement last July of the EU reductions.

I would like to express once again our appreciation of the British Government’s financial support and their proactive approach to reducing the margin.

Banking Sector Reform

When we took office, we undertook to address the problems of our banking sector. People feared in 2010 that it would take €35 billion to plug the problems of our banks.

Since then:

We have both restructured and recapitalised our banks with recapitalisation costs to the State reduced to €16.5 billion while still delivering the €24 billion required by Prudential Capital Asset Review (PCAR).

We will now have two universal government supported pillar banks – Bank of Ireland and Allied Irish Bank – focused on activities in Ireland the United Kingdom. These pillar banks participate alongside others like Irish Life and Permanent, Ulster Bank, Nationwide and other foreign owned banks that continue to operate in the Irish economy.

We have succeeded through foreign investment in keeping the State’s ownership in Bank of Ireland to only 15%. We are introducing new governance and supervisory frameworks both at bank, regulator and state level.

We have embarked on an ambitious deleveraging programme for our PCAR banking system. Despite the turbulence in economic markets we met our €32 billion 2011 target for these four banks. To put it another way in one year we achieved the frontloading of 46% of our three year plan target of €70 billion.

Thanks to the largest single loan sale transaction in global real estate history, we also deleveraged nearly €8.5 billion from IBRC (the former Anglo Irish Bank), far in excess of the €2.5 billion target set in early 2011.

We have seen a reversal of the deposit outflows that occurred in periods prior to our PCAR and recapitalisation, and significant stabilisation and indeed growth in deposit numbers in the second half of 2011.

Our banks have successfully tapped into wholesale secured repo markets in recent months. These improved funding profiles and this deleveraging have significantly reduced monetary funding support of the government supported banks from a high of €157 billion in February to €109 billion at the end of the 2011.

Ambitious targets established for sanctioning of lending into the economy by the pillar banks are being closely monitored. There are still many challenges ahead in restoring the government supported banks to full viability and private ownership, particularly in the light of greater pressure on the European banking sector in general, but we are pressing forward with determination on that path.


We are committed to working closely with our international funding partners, to ensure that we deliver on all of the programme commitments.

The programme is a fact of life for us in Ireland now, including the quarterly reviews by the Troika (European Commission, European Central Bank, and International Monetary Fund).

I take no pleasure from this situation.

But I do get some small degree of satisfaction from the fact that each Troika review to date has been positive, confirming that we are delivering on our commitments, implementing the necessary reforms, and achieving our targets.

We have built up a high level of trust between the Government and our official funders, which in turn allows greater room for sensible evolution and enhancement of the programme to improve its prospects of success, to support a return to growth, and to restore market confidence in our public finances and banking system.

Our progress has been acknowledged by our peers and the international markets and has gone some way to restoring our international reputation. Those positive endorsements are an important underpinning of the credibility of the decisions and actions of my Government.

Nobody will tell you that the actions we have taken, or their impact, have been easy, or painless – far from it. But my Government’s responsibility goes beyond simply delivering the numbers. We have to do so in a way that is least damaging or restrictive to the economy, that boosts competitiveness, and that provides the foundation for increasing employment.

We are starting to see positive results.

Ireland’s competitiveness is improving significantly. We returned to growth in 2011, for the first time since 2007. We had a current account surplus in 2011, the first in over ten years..

These are all positive indicators of progress, despite the fact that significant challenges remain.

Our export sector is the engine of our growth, with exports at record levels and particularly strong performances in key areas like financial services, software and business services, pharmaceuticals and the agriculture and food sector.

The fundamentals of Ireland as an attractive location for investment, and from which to service wider markets in Europe and beyond, remain strong.

We continue to have an exceptionally young, well-educated workforce. Unit labour costs have reduced significantly over recent years. We remain fully committed to our 12.5% Corporation Tax rate.

According to the World Bank’s annual “Doing Business” report for 2011, we provide the most supportive business environment in the euro area (and are ranked 9th globally).

The IBM Global Location Trends Report has found Ireland first in the world in terms of the value of projects and investments it attracts. 2011 was a record year for our Investment and Development Agency – IDA Ireland – in terms of new investment projects and new jobs.

International companies are voting with their wallets.

- Almost 500 US Companies are now operating in Ireland.

- 80% of the top global banks have operations in Ireland.

- 9 out of the top 10 pharmaceutical companies are in Ireland.

- 8 out of the top 10 technology companies are in Ireland.

Ireland is also proving itself as the location of choice for the world’s leading new economy, with many of the so-called ‘born-on-the-internet’ companies such as Google and Twitter establishing significant operations.

Tourism is also on the increase. There is terrific value to be had in Ireland today. Indeed, I would encourage any of you making plans for a short break or for summer holidays to consider Ireland this year. You won’t be disappointed.

However, domestic demand remains subdued and precautionary savings remain high.


Export-led growth is not as jobs rich as domestic demand driven growth would be so our level of unemployment is destined to remain unacceptably high this year.

To tackle this we are prioritising a number of policy initiatives to get people back to work as quickly as possible – a priority reflected in our fiscal approach favouring taxation on consumption rather than income, widely recognised as being least damaging to an economy.

Last year, within months of taking office, we brought in a Jobs Initiative to address the jobs crisis and stimulate confidence in our economy, including

Introducing labour intensive job creation schemes;

reducing VAT for labour intensive services particularly in tourism;

reducing employers PRSI; and

reforming the visa system for entry to Ireland.

In addition, we introduced new training and internship schemes to assist jobseekers, including graduates, to find jobs and get workplace experience.

My Government will shortly publish a policy statement on labour market activation “Pathways to Work”, which will set out our strategy to reduce and prevent the drift into long term unemployment.

During 2012 we will establish a new Labour Market Activation Fund and prioritise places in the further education and training sector for those who are on the Live Register for 12 months or more.

At the same time we are supporting enterprise to create jobs, including creating a new Micro Finance Loan Fund for small enterprises and introducing a Temporary Partial Credit Guarantee Scheme to assist commercially viable businesses having difficulty securing credit in current market conditions.

Shortly we will announce a comprehensive Action Plan for Jobs that will include measures to support indigenous start-ups and help business to grow and set out actions to exploit sectors of opportunity for Ireland such as Cloud computing, Digital gaming, Agri-Food and Financial Services.

Reflecting our strong commitment to supporting the enterprise, research and development activity, despite the current fiscal constraints we are maintaining strong funding support for science, technology and innovation funding in 2012.

Concluding remarks

I don’t underestimate the scale of the challenges that remain. But by nature I am an optimist. And optimism, confidence and enthusiasm are essential ingredients as we face the future.

As an exceptionally open economy, Ireland is more exposed than most to the ups and downs of the global economy. Above all, we need to see a resolution of the crisis in the euro, and a return to growth across Europe and beyond.

For my part, I am determined that we will continue to take the steps necessary to rebalance our public finances, to rebuild our banking system and to generate jobs.

This is necessary not only in its own right, but also to ensure that we take maximum advantage of the improvement in international and global conditions as and when it occurs.

In the meantime, I remain committed to taking credible, decisive action which..

Demonstrates our credibility and our commitment to meeting the challenges we face;

Fosters confidence at home and abroad;

Creates the conditions for more growth, increased employment, greater

prosperity for all; and

Delivers on my goal to make Ireland the best small country in the world in which to do business, to live, to work, and to grow old.

Thank you.

Enda Kenny: Ireland faces huge challenges, but I’m an optimist>

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