Leaving the euro–an option for Ireland?
December 8, 2010 1 Comment
As the Economist Intelligence Unit’s Ireland analyst, I wrote an op-ed piece in today’s Financial Times headlined Ireland should leave the euro. This headline was added to my article by an FT editor, and is slightly misleading. The piece was not prescriptive, and in fact I do not think Ireland should definitely leave the euro.
I do however think the case for Ireland is less clear-cut than it is for all other euro area countries and particularly for the other peripheral countries. If Greece or Portugal were to leave monetary union, there is little doubt that it would have disastrous results for both countries. Ireland’s economy is structured differently, however. Ireland has already implemented many of the structural reforms Greece and Portugal are just beginning to think about, and its growth prospects are consequently much better. Furthermore, many of the downsides to leaving the euro are going to happen in Ireland anyhow.
Of course, leaving the euro area would not be easy or painless. But I think it should be on the table in Ireland and debated very seriously amongst the political elite and the public more generally. The point of my article was to moot the idea and kick off the debate. Judging from the commentary it received when it was picked up by the Irish Economy blog here, the piece succeeded in doing just that.