Ireland faces EU exit?

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I have mentioned, mainly in del.ic.ious comments, the real possibility that in my opinion Ireland might be expelled from the European Union. I was, therefore, intrigued to know that Wolfgang Munchau raised the same issue in the FT this morning. He said:

within a couple of weeks, the chances of Ireland ending up outside the EU have turned from zero to a distinct possibility. The same goes for the Czech Republic, another potential non-ratifier. I do not want to get into the legal details of how a country's departure from the EU could be accomplished. Suffice it to say that it can be done within European law as long as there is political will.

What strikes me the most about this extraordinary turn of events is the perception in Ireland that a break with the EU would be no big deal. I received a large number of letters from Ireland last week from readers who steadfastly maintain that the country's economic success had nothing to do with the EU and everything to do with domestic policy - in particular with low corporate taxes and skilled labour.

The view expressed by those correspondents is as wrong as it is revealing.

I absolutely agree with him. There is an absurd belief amongst the Irish that tax innovation has created their wealth. That is most certainly untrue. What their tax innovation did was steal taxes due to other countries; worse, it contributed to poverty elsewhere. That is at best only a measure of relative wealth, and a decidedly poor one at that.

Ireland broke out of its pre EU sloth for two reasons. First it had an enormous army of well-qualified young people, whose education was paid for by the State. Second, the EU provided it with the grants and subsidies to create the infrastructure on which it could compete.

The difficulty for Ireland is if they are expelled from the EU they will be denied access to the market which has provided them with their wealth. I think it fair to say that they should expect their economy to fall off the age of the Cliffs of Moher if that's what they do. And I wouldn't wish that on anyone.


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