Vol. 315 No. 3
asked the Minister for Finance if in the discussions with the ICTU in the aftermath of the rejection of the proposed national understanding the question of the possible necessity for devaluation within or withdrawing from the EMS has been discussed and if he will make a statement on the matter.
16.
asked the Minister for Finance if consideration has been given to devaluing within or withdrawing from the EMS and re-establishing parity with sterling.
With the permission of the Ceann Comhairle, I propose to take Question Nos. 15 and 16 together.
No consideration has been given, or is being given, to devaluing within the EMS or withdrawing from the system. The question of making a statement on these matters, therefore, does not arise.
Would the Minister accept that the House and the country have been grievously disappointed by our performance within the EMS and that our pound today standing at 94.5 per cent of sterling is greatly at odds with what we were led to expect in several debates in this House? Would he also agree that this effective devaluation against sterling is causing great inconvenience especially in Border counties and in travelling to England? Does he propose to take any steps to reduce this inconvenience?
If anybody is disappointed with the performance of the Irish £ within the EMS, such a person is mistaken. The Irish £ is performing very well, and precisely as we had hoped within the EMS, and staying within the bands which is the whole object of the exercise to ensure stability of the various currencies within the bands. The Deputy is aware that sterling is not within the EMS and that there has been a considerable strengthening of sterling in recent months for various reasons which I need not go into. It is important that people should understand that the strengthening of sterling is strengthening against all the currencies of the EMS and not against the Irish £. In so far as the sterling appreciation is concerned, I am sure the Deputy knows this is presenting a number of problems to British exporters. Let us imagine for a moment the reverse position and assume the Irish £ had appreciated that much over sterling, then there would be certain problems for us. There is no reason at all to be disappointed with the performance of the Irish £ within the EMS. It is performing precisely as we hoped it would.
Undoubtedly there are temporary advantages from devaluing against the British £ but in the end it is a sign of great weakness. Would the Minister agree that the inflation rate he has just announced to the House, the wage negotiations which have been going on, and so on, are greatly at variance with what he, his colleague, the Minister for Economic Planning and Development, and the Taoiseach told us would be necessary if we were to survive and do well in the context of the EMS? Would he further agree that our whole performance before going into the EMS and within it has been nothing short of a disaster?
On the contrary. The implications in the Deputy's question would seem to be that we ought to be in line with sterling. If we were, our inflationary problems would be added to considerably. I must repeat, because the Deputy does not appear to understand it, that the Irish £ has performed precisely as it was intended to perform in the EMS. It has stayed within the bands, within the upper half of the bands and that is what the object of the exercise was, not to have our £ floating up and down with sterling. Therefore, our £ is performing exactly as we had hoped it would perform.
Would the Minister agree——
We have had enough questions on this matter.
——that he is on record as saying that we had to break the link with the sick man of Europe, the UK, but would he not regard Ireland now to be the sick man of Europe?
What must the Deputy pick on his own country? Why not pick on any other country within the EMS? Is he suggesting that the Germany economy is the sick man or that either Belgium or Denmark is the sick man of Europe? We are performing in line with the other seven countries in the EMS and this is exactly as we should be doing. I would ask the Deputy not to misrepresent the position of our currency as performing badly when it is performing well.
Would the Minister accept that, compared with Germany, our inflation rate is exceptionally high?
I am calling Question No. 17.
