Speech
Brexit and the challenges facing the European Union
From Department of Public Expenditure, NDP Delivery and Reform
Published on
Last updated on
From Department of Public Expenditure, NDP Delivery and Reform
Published on
Last updated on
Speech to the Institute of International and European Affairs
Paschal Donohoe TD, Minister for Public Expenditure and Reform
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Good afternoon everyone. I am delighted to be here today to speak to you and with you about Brexit, the EU and Irish prospects, and I am particularly pleased that we are in here on the northside of Dublin, in my own constituency, to do so.
‘We can’t trust the evening news. We can’t trust our politicians. Our universities, the gateway to a better life, are rigged against us. We can’t get jobs. … This isn’t some libertarian mistrust of Government policy. This is a deep scepticism of the very institutions of our society.’
This quote is from ‘Hillbilly Elegy’, last year’s seminal book from JD Vance on American politics and culture. As it is in America, so too it is in Europe.
These views are entirely consistent with what we heard from some during the Brexit referendum.
Indeed Bruegel, the Brussels-based economic think-tank, recently published an analysis of the referendum that showed ‘a 1 per cent higher poverty rate boosted the share of ‘leave’ votes by 1 percentage point’, going on to say that ‘the result highlights poverty as a determinant of ‘leave’ votes’.
Our task in the months and years that lie ahead, in a post-Brexit world, is nothing less than to restore trust in the institutions that underpin our society and economy and show that they can and do work.
To show that Europe can work, however, we must recognise the stark reality of what has happened.
At many points in the last 12 months, many of us, myself included, may have remarked that ‘we could not believe’ that things would occur as they did.
The fragmentation of Dáil Éireann that, for a time, looked like it might make it too difficult to form a Government.
The decision by a majority of the British people to leave the EU.
The election of now President Trump on a policy platform and with a campaigning and governing style different to anything we have seen in recent American politics.
There have been acres and hours of comment on these electoral outcomes.
What is less frequently commented upon is the economic context within which this is happening.
This context is that national income growth and employment growth are all realities here, in Britain and in the United States.
It is an empirical fact that more of us are working and fewer of us are on the dole than was the case in 2008 and 2009 when the world economy was so severely derailed.
Two million jobs were created in Britain between 2010 and 2015.
In the United States, 11 million jobs were created under President Obama.
And in the EU, Eurostat estimated back in September that there were over 232 million men and women employed throughout the Union; the highest number ever recorded.
All these things would have seemed impossible in 2009 when the mood was as dark as our hopes for the future.
This begs two very serious questions;
Firstly, if, despite the return of economic growth, we are witnessing a continued and deep mistrust of what some call ‘the establishment’, what would happen if another economic downturn was to occur?
And, following on from that, if the Great Recession asked if our economic institutions could change and adapt maybe the coming years will ask the exactly same of our European and national political institutions?
How Ireland and Europe responds to Brexit may well offer the defining answer to both of these questions.
2016 will probably be remembered as the year in which populism found its people – and the people found it.
A research paper from the Harvard School of Government estimates populists parties captured about one in every eight seats in recent European elections with its share of the vote rising from 5% in the 1960s to over 13% now.
It also disguises the fact that support and influence are often very different things. It is arguable that the rise of UKIP, for example, did not see that party win power, but did see that party win the argument.
John Judis, a former editor of The New Republic, in his book ‘The Populist Explosion’ defines populists as those who ‘assume a basic antagonism between the people and an elite’, which is at the heart of their political identity, and whose demands will not be satisfied by incremental progress but, rather, ‘must be delivered now’.
This definition has been added to by Jan Werner Muller, a professor of politics in Princeton University, who contends that;
‘All populists oppose “the people” to a corrupt, self-serving elite…But not everyone who criticizes the powerful is a populist. What really distinguishes the populist is his claim that he and only he represents the real people.’
This approach is evident in many places in Europe, including, I believe, our own.
Too often some in the political arena have claimed a monopoly on authenticity where the compassion, not just the competence, of those of us in the governing centre is challenged on an almost daily basis.
But this challenge is so continuous that it poses not just a challenge for those seeking to lead our governing and parliamentary institutions but for the credibility of the institutions themselves.
This is an enormous challenge for Europe. Jean Monnet said ‘nothing is possible without men, and nothing is lasting without institutions’.
So where do we begin?
We are now living through the post-Great Recession era, where our economy and society are healing but are not yet healed.
An era where the cause and effect of a growing economy and political incumbency no longer applies.
Look at Denmark, for example, where an unemployment rate of less than 5% saw the far-right People’s Party almost double their support and win more than a fifth of the vote.
The Democratic Party in the United States would point to the huge economic advancement of the last eight years and scratch their heads about their eviction from the White House.
These types of electoral outcomes are products of a new political dispensation where growth no longer automatically means healing and Governments cannot count on growth to secure a desired outcome at the ballot box.
The greatest danger we therefore face is complacency that somehow these issues will go away, that ultimately everyone will ‘come to their senses’ – for want of a better phrase – and the huge changes people are experiencing in their lives, in their careers, in the social interaction they have with their partners, their families and their friends, will not change the institutions in which we operate.
Indeed, it would be incredible if this were the case.
It would be incredible if the forces of deindustrialisation, of the digital revolution, of multiculturalism, left politics and polities went unaltered.
Where, perhaps, we have already been complacent is the inability of those of us in the political centre to match the passion of non-mainstream politicians, especially as that non-mainstream passion is wrapped around false hope and dangerous ideas that will ultimately hurt the vulnerable people that populists claim to represent.
What we have missed is the due focus on the link between job growth and income and living standard growth.
Equally however it remains the case that the collapse of growth makes the healing process so much more difficult as to be impossible.
And that is why it is so important for centrist politics to assert itself again and tell its story. We must find our voice again.
We must make the case for a global, interconnected world, Europe and Ireland that opens minds, addresses poverty and promotes diversity within society.
We must reassert the case for interdependence as a source of strength, not weakness.
That market economies, working hand in hand with a welfare State and proper regulation, are still the best way to deliver jobs.
That we must ensure stronger public institutions that deliver fairness and better public services.
And that regardless of the challenges that face us, that face us as citizens, communities or countries, that we do so better together than on our own.
If we do not do so our political institutions will face the same questions our economic institutions struggled to answer in recent years. A diverse intellectual framework which is capable of being harnessed by populist sentiment. Writers from the English philosopher John Grey, the French novelist Michel Houellebecq, the German economist Wolfgang Streeck to the very recent work of Pankaj Mishra, question the very viability of our political and economic order. The fusion, of even fission, of that thought with political populism is under-estimated at our risk.
So we must stand over these values – values that are central to European identity and the European Union project. I also believe they are part of our Irish DNA and in our Irish national interest.
That is why our future is in the EU.
In asserting our confidence in them, we are expressing our confidence in Europe.
So this is why the Government is prepared and continues to prepare for British withdrawal.
We have established our headline priorities, namely;
Ireland will negotiate from a position of strength, as one of the 27 Member States firmly in, and committed to, the European Union.
Also critical will be the next stage, which will focus on the future relationship between the UK and the EU.
We are engaging extensively with all other Member States, the EU institutions and the Barnier Task Force and will participate fully in all of the structures of the EU in preparing for the negotiations.
These structures will expand and intensify once Article 50 is triggered and we will pursue our national interests and priorities fully within the established legal and political framework for the negotiations.
Specifically, and vitally, the Government is fully committed to protecting the integrity of the Good Friday Agreement and its core principles as well as supporting the stable operation of its interlocking institutions.
This is particularly acute in the context of the approaching election campaign and the absolute need for all parties in the North to act responsibly in word and deed in the coming weeks.
A practical, real world example of this is the cross-border PEACE and INTERREG funding programmes for which I have responsibility.
PEACE and INTERREG are the two North-South cross border programmes, managed and implemented by the Special EU Programmes Body; one of the cross border bodies established under the Good Friday Agreement.
Since the Brexit referendum we have secured the programmes for the short-term.
The medium term objective is to ensure the full and successful implementation of the programmes to 2020.
In the long term the objective is to ensure that there will be successor programmes to the current programmes.
But let’s be clear- we’re under no illusion about the nature and scale of the Brexit challenge.
However, we should not assume the EU we are now planning for will be the same as the EU we are now members of, minus the UK.
I spoke earlier of how our economic prospects are brighter now than we might dared to have imagined a few years ago.
We must have the same conviction that the same can and will be true of our political prospects.
As we see a new set of values establish themselves in other countries, I believe now is the time for Europe to assert its outward looking vision.
So too is it right for people like me to challenge the new populist orthodoxy that only total, immediate change, no matter how unsustainable, is the way to make things better.
Incremental change may be slow but it is solid.
It is lasting.
It is real.
Look, for example, at the progress we have made on Irish national debt.
Once larger than our national annual output and in danger of tipping our entire economy into a fiscal tailspin, Ireland’s national debt is now under control and falling, not through the catastrophe of a sovereign default but by steady deficit reduction and controlled public spending.
Look, too, at job creation – our unemployment rate has fallen by one tenth of one per cent, month by month, for four years.
No big bang, no silver bullet. Just real, meaningful, sustainable improvements.
The same applies to many European economies.
We achieve these improvements by having the courage of our convictions and withstanding the lure of the eye-catching headline or the applause of the crowd.
As a centrist politician and as Minister for Public Expenditure and Reform, I have to balance competing principles every day.
But that does not mean I have none.
Simple solutions rarely work – but that does not mean I believe no solutions can be found.
Above all, we in the centre, who are saddened by Brexit, must adopt a tone that is moderate but firm.
The nature of our political discourse, far too often, has been coarsened.
It is as if the need for decency has been replaced by the need for 140 characters or less.
As if the need to have a meaningful debate has been replaced by the need to garner the most likes or win the most page impressions.
The French philosopher, Raymond Aron, fled the Nazi occupation of his country but recognised the dangers of communism as well and knew a thing or two about the need to avoid political extremes.
He said:
‘Freedom flourishes in temperate zones, it does not survive the burning faith of prophets and crowds‘.
It was true in Aron’s lifetime and it remains so now.
So while it is now radical to be moderate, we can seek to credibly meet the needs of the people we seek to represent.
Most importantly will be the need to deliver not just growth, but inclusive growth.
That means recognising that a job does not necessarily mean security and that we need to ensure well paid jobs, that engage the intellectual or artistic or creative talents in us all.
That is recognised in the UK’s green paper on industrial policy that Prime Minister May published last week, which refers to the need for wage growth as well as employment creation.
So too is it recognised in the European Commission’s Europe 2020 strategy which says that ‘in a changing world, we want the EU to become a smart, sustainable and inclusive economy’.
We recognise it here, in the north inner city, through Kieran Mulvey’s North Inner City Initiative or through the Government’s Action Plan on Rural Development.
Inclusive growth means investing in infrastructure and in education – in people and the institutions to help people realise their potential.
Look for example, at our national and European efforts to build the infrastructure of the future.
Our national Capital Plan, which I will review and strengthen across this year, will see tens of billions of euro invested in roads, public transport, schools and hospitals by the start of the next decade.
The Juncker Plan of investment across the EU will see €500 billion worth of investment by 2020 that will benefit 290,000 SMEs and has been credited with the creation of 100,000 new jobs.
As the UK looks to leave the Single Market we should seek to deepen it, through for example the digital economy and that the EU should be as ambitious with trade plans as anyone else in a changing global economy.
The same ambition applies to education.
Last week, for example Minister Bruton published plans to deliver 50,000 apprenticeship and traineeship registrations by 2020.
Meanwhile the European Investment Bank, over the last five years, has provided more than €7 billion for investment in universities across Europe, including €512 million in Ireland.
Ireland is actually the fifth largest country of operation for European Investment Bank support for universities and only in November agreed loan funding for Trinity College of €70m and €100m for UCC in Cork.
This is inclusive growth in action.
This in turn must facilitate a stronger link between job creation and maintenance and the enhancement of living standards and income.
But we can only have inclusive growth if we have the sound public finances to fund it- which is why our membership of the Eurozone and eliminating the need to borrow from volatile financial markets to pay for day to day public services and wages is so vital. It is the economic foundation upon which we build all else.
So I want to leave you today, not with a dystopian horizon of a post-Brexit EU and Ireland that we must fight to avoid.
Rather, I want to end by talking about how the role of Europe, and its Member States can be, in a changed world.
And we must recognise this changing world, where the levels and form of political and economic integration are now changing. Ireland has ‘skin in this game’ as we have built 40 years of economic development on the stability of this integration.
But I remain confident that if, as the Desiderata tells us, ‘we speak our truth, quietly and clearly and listen to others’, we, and all who support the shared liberal, democratic values of the European Union can prevail.
In ten or twenty years’ time, Europe may well be an open trading bloc in a more closed world.
Or it may be that our success is seen in contrast to the failure of the new protectionism and the rest of the world comes back to our way of thinking.
But, mark my words, one way or the other…
are achievements and values that we should stand for, not shy away from.
Politics lives in the moment, flows from the past and looks to the future. It looks to horizons that are bound by uncertainty and that we will never reach, because the path to them is always a work in progress. But to make this work inclusive and sustainable, we must recognise that compass that gives this journey direction, values; that are European and Irish, values that we must stand by and for.
ENDS