On Monday 18 July, the Ireland Luxembourg Chamber of commerce (ILCC) held an evening seminar at the Hotel Parc Belle-Vue in Luxembourg city centre with special guest Eoghan Murphy, Minister of State at the Irish Department of Finance, with special responsibility for Financial Services, eGovernment and Public Procurement, who spoke on the topic of Ireland’s Economic Recovery and Challenges Ahead, Brexit and a sluggish global economy trigger new headwinds.
Previously, Eoghan Murphy served on the Banking Inquiry, the Public Accounts Committee, the Dáil Reform Committee and as Head of the Oireachtas delegation to the OSCE. Before politics, Eoghan worked for NGOs and the UN in the field of international arms control.
Ireland has made remarkable progress in the past seven years to recover from the severe economic blow it suffered after the banking crisis and the property crash. Like Luxembourg, Ireland is a small open economy at the mercy of global events but now, just as the recovery was underway, turmoil in Ireland's nearest neighbour after the Brexit vote, on top of a sluggish global economy, have created fresh headwinds. Irish Minister of State Eoghan Murphy reviewed the progress made to date and the challenges ahead.
The Chairman of the Ireland Luxembourg Chamber of Commerce (ILCC), Joe Huggard, welcomed the 50+ strong attendance on what was one of the hottest days of the year to date. He opened by stating that we live in interesting times, referring to the Brexit. In times past, he recalled, "if Britain sneezed, Ireland caught a cold", but these times are now historic. The turnaround in the Irish economy has been outstanding; however, there are still a number of social challenges to be addressed.
Minister of State Eoghan Murphy stated that he was appointed as Minister of State a number of weeks, and said that he was delighted to be back in Luxembourg which he described as "a lovely international city". He acknowledged that while he does not have a financial background, he has been working in related international areas. In the world of politics he quoted "there are decades where nothing happens and there are weeks where decades happen".
He talked about the Irish economy and the collapse of the financial sector, the bailout and then the recovery, which he described as real and robust. The Fine Gael-led government of 2011 changed the way some of the economy worked and, in 2015, exited the bailout. Ireland's debt ratio has not dropped below the EU average, a considerable achievement. The Irish economy grew 6-7% last year, is expected to grow 5% this year, with 3.5% forecast for 2017.
Unemployment peaked at 15% and is now below 8%; job creation is very important for the Irish economy. He referred to the EU and the balance which will be upset when Britain leaves the EU. Trade will not stop but the issue of freedom of movement of people is crucial. He acknowledged that we were shocked at the outcome of the British referendum. Ireland developed a contingency framework according to three pillars and this included the Central Bank ensuring there was liquidity in the system. From 2018 on, there will be a "rainy day fund" which will protect Ireland from negative eventualities.
One of the main messages to convey now is that Ireland is staying in the EU, he stressed, irrespective of its close ties with the EU. Inside the EU, Ireland is emphasising its special relationship with the UK, particularly in respect of Northern Ireland.
The great unknown is when the UK will leave the EU and what the EU will look like then. Once Article 50 is triggered, there will be a 2-year process of negotiation for the UK to leave the EU, a process that itself will take many years. This 2-year process could be extended, and there could be a parallel process to negotiate what the new relationship will look like. He also suggested as a possibility that when the UK work out what the alternative could be, that they may put that option back to the people in another referendum, but admitted that this scenario is not very likely.
One of the worrying issues during the referendum campaign was what Michael Gove and others were saying; the lack of authority and the lack of consistency are also both worrying, as it is difficult to determine what is the truth and what can be believed.
Ireland wants to be recognised as a global location of choice for cutting-edge technology and business. He mentioned a forum being organised on 24 January next year and encouraged ILCC members to apply to attend.
In answer to a question from the floor, he acknowledged that Ireland as a small market economy is at risk from abroad, but the government is looking ahead and putting in place measures to reduce any such impact. Brexit is the largest of these, but there will be a lag effect, meaning that the effect may not be seen immediately. Other international issues that remain a risk include the refugee crisis and terrorism.
The formal part of the event was followed by a reception provided by LeneLife.
Photo (L-R): Ambassador Peadar Carpenter; Minister of State Eoghan Murphy; Joe Huggard, ILCC