Bernard J. Durkan
Question:109 Mr. Durkan asked the Minister for Finance his appraisal of the impact to date on this country of Britain remaining outside the EMU; and if he will make a statement on the matter. [14056/99]
Written Answers. - Economic and Monetary Union.
To fully address this question it is necessary to hypothesise, first, about the rate at which sterling would have entered EMU on 1 January 1999, and second, the impact of the UK's participation in EMU on euro-zone monetary policy. As these two hypothetical questions are virtually impossible to answer, it is not possible to assess the impact to date on the Irish economy of the UK remaining outside EMU.
The chief concern about UK non-participation has always been the potential impact on the Irish economy of sudden changes in the value of sterling. As highlighted in the ESRI study on EMU, a large fall in the value of sterling would adversely affect the competitiveness of Irish exporters whilst an appreciation of sterling against the euro would, all things being equal, lead to higher prices in Ireland. This has not been the experience to date.
Since the start of EMU the euro has fallen by about 6 per cent against sterling. This will improve the competitiveness of Irish exporters in the UK. However, it will also, if sustained, increase import prices and put upward pressure on inflation in Ireland.