I propose to make a statement on the European Council which I attended with the Tánaiste and Minister for Foreign Affairs, Deputy Spring in Copenhagen on 21 and 22 June 1993, where the Minister of State for European Affairs, Deputy Kitt, was also in attendance. I shall deal also with my meeting with the British Prime Minister in London on 16 June.
The European Council was a valuable meeting, which had the unacceptably high level of unemployment for the first time at the top of its agenda. This issue dominated the meeting, a source of considerable satisfaction to me, as I had been pressing for this as a top priority since the Birmingham European Council, as many of my predecessors did before me. I was the first to recognise that the reason for our success was largely because other member states are now experiencing the same serious problem of unemployment that we have faced for years.
Commission assessments put before us in Copenhagen indicated that the outlook for the Community economy has deteriorated since its previous assessment in February last. Economic activity is more depressed, and the recovery which had been projected for the end of this year was not expected — unless new action was taken — to take hold until mid-1994. This implied that unemployment could reach 12 per cent on average across the Community.
The forecasts also showed that the Irish economy is faring better than most of its partners, even in the face of these difficult circumstances. Ireland is the only member state to have maintained significant positive growth throughout the recession. The Commission foresees a 2.25 per cent growth in GDP for Ireland this year. This contrasts with the expected decline of 0.5 per cent across the Community at large. The Government feel that a somewhat higher rate is achievable, but even on the Commission forecast our growth will be the fastest in the EC. Taking account of the mid-May outturn showing a rise of less than 1 per cent inflation in Ireland this year is now forecast to be under 2 per cent, the second lowest in the EC. Similarly, the Commission's forecast of our balance of payments surplus this year is 4.75 per cent of GDP, following the record £1.5 billion surplus last year, which is second only to Luxembourg. For the EC as a whole, the general Government deficit is expected to be 6.25 per cent of GDP: Ireland, with a forecast of about 3 per cent is one of the lowest, again apart from Luxembourg. Across the Community, employment is forecast to fall by 1.75 per cent whereas for Ireland the assessment is for no change.
We can take some satisfaction from these various indices of better performance as a vindication of Government policies and our successful social partnership, as far as they go. But we can afford no complacency in the face of our grim level of unemployment, the second worst in the EC after Spain. Our situation reflects the strong national growth in the labour force and the return of earlier emigrants occasioned by economic recession elsewhere. But we have to recognise that it is also heavily affected by the reality that even the excellent economic growth we have had has not delivered additional jobs in the numbers we would have expected in the past, despite the 45,000 net new jobs created between 1987 and 1990.
Growth has become less job-intensive. This is true across Europe. It is a phenomenon that loomed large in the discussions in Copenhagen. There, we had from Commission President Delors a penetrating analysis of this experience and of the competitive situation of the European economy.
In our Conclusions, we aimed to restore confidence through implementation of a clear strategy — combining short, medium, and long term measures — to restore sustainable growth, restore the competitiveness of European industry, and reduce unemployment.
The short term measures agreed are primarily directed at boosting economic growth, but also focus on getting more jobs out of growth. We decided to build on the Edinburgh Growth Initiative. This was not of adequate dimensions or impact, but it is estimated to have added 0.6 per cent to the EC growth rate and to have boosted employment by 450,000. In their planning for their 1994 budgets, each member state is to give particular importance to promoting investment, including bringing public investment forward in time, taking account of the multiplier effect of concerted action across the Single Market. In Ireland in 1993, we have a record size Public Capital Programme of £2.4 billion. At the Community level, we invited the European Investment Bank to increase to 8 billion ECU — about IR£6.5 billion — the temporary loan facility of 5 billion ECU agreed at Edinburgh and to extend it beyond 1994. Of the increase, 2 billion is for trans-European networks and 1 billion for small and medium sized enterprises — SMEs. We asked the ECOFIN Council to examine how the element for SMEs could benefit from interest subsidies to a maximum of 3 per cent linked to job creation. This could be of considerable benefit to SMEs in Ireland.
We agreed on the importance of creating the budgetary and economic conditions for rapidly bringing down interest rates in Europe. This is what the Government have done in Ireland, and Deputies will have noted that the improved conditions have allowed the Central Bank to recently make its twelfth reduction to benchmark rates since the competitive devaluation. Rates are not on a downward trend throughout the EC. and indeed interbank rates in Ireland and France have recently moved below German rates. It is claimed, with what justification the future will tell, that the French franc will now share in the anchor role previously held by the Deutschmark. Key interbank rates here, now below 7 per cent are at their lowest level since the late 1970s. Mortgage rates are in the range 6.5 per cent to 9 per cent and consumers now have much greater choice, because of increased competition between mortgage providers.
The European Council also called upon the Community institutions to adopt the revised Regulations on the Structural Funds by the end of July, so as to allow proceed the 160 billion ECU programme of investment and structural policy measures to be financed by these funds. On the funds, the Compenhagen Conclusions include the following very important statement.
The legal texts as well as the practical implementation should fully respect the agreement reached on the Delors II package in Edinburgh.
Against the background of the inclusion of that sentence in the conclusions, I took the opportunity to have a brief discussion with President Delors. Taking account of that, of an earlier meeting between him and the Tánaiste, and also of the Copenhagen Conclusions, I came away with a firm expectation that the Edinburgh agreements will be faithfully reflected in the allocations. President Delors commented very favourably on Ireland's use of the funds to date, which has helped raise our average GDP per head relative to the Community from 60 per cent in 1985 to 75 per cent in 1993.
Regarding short-term action, the European Council agreed that the ECOFIN Council would examine a Commission proposal aimed at helping member states to boost investment ahead of schedule. They would be able to draw this year on a five billion ECU "bridging facility", with the loans repayable out of the new round of Structural Funds and from the Cohesion Fund, when these flow from early 1994.
There is a pro-employment bias in these short term measures, but we recognised that they would need to be complemented by structural measures to tackle deeper causes affecting Europe's comparative record in job creation; and by labour market measures specifically focused on the unemployed. The meeting accepted my proposal that, for these measures, there should be heavy concentration on tackling the unacceptably high unemployment, including the long term unemployed, young people, and those most affected by social exclusion. In the course of an exchange of ideas on such measures, I told my colleagues that the Government here are proposing, as part of the national plan under preparation, a major programme aimed at these groups, in order to put to more active use, focused on jobs, money now spent on social welfare support for the same people, while out of jobs. These moneys and matching EC money would thus be mobilised to provide a total of 30,000 jobs, in such areas as community development, voluntary organisations, and preservation and enhancement of the environment.
I gave a fuller outline of what is envisaged in my speech yesterday in launching the new National Economic and Social Forum, the birth of which I would like to welcome in the House. In developing the programme the Government drew substantially on the very valuable work of the Oireachtas Joint Committee on Employment, which I commend here today. That work will now be carried forward in the NESF. I particularly welcome the fact that all sides in this House are participating in the Forum.
Having discussed the outline of a medium term plan presented by President Delors — which is annexed to the Presidency Conclusions which have been laid before both Houses of the Oireachtas — the European Council invited the Commission to present for the next summit in December a White Paper on a medium term strategy, after taking on board views and comments to be supplied by all member state Governments by 1 September next on the proposals made by President Delors. These proposals included: raising the percentage of EC GNP devoted to research, development and innovation from 2 per cent to 3 per cent; a major programme of investment in transport and telecommunications infrastructure, at a rate of 30 billion ECU a year; creation of a "European information infrastructure" embracing telecoms, computers, fibre optics etc., at a rate of 5-8 billion ECU a year; and more active policies towards the labour market with much more resources devoted to helping people get jobs and training.
There was no widespread support for the idea of dismantling Europe's long-established social support systems. The Government certainly do not, and would not, support any such approach. But there was interest and there is a need to facilitate more flexible arrangements for the world of work — for example, in job sharing and job rotation — which we will discuss with the social partners. There was also interest in the idea of shifting some of the taxation on labour more towards the consumption of scarce energy and other natural resources, ideas reflected in our conclusions.
I shall arrange for an Irish contribution to the Commission's White Paper. Our input will be based on the National Development Plan and on preparation for the next Programme for Economic and Social Progress. A key part of such a programme, if agreed, must be a coherent action plan consisting of measures drawn across the various areas underpinning employment. These will include education, taxation, local enterprise effort, encouragement to start up business, the financing of business development and measures specifically tailored to develop individual jobs across all sectors, particularly the services sector, where we need to concentrate much more effort in future.
At Copenhagen there was also recognition that a comprehensive, durable and balanced agreement in the GATT Uruguay Round would give a major impetus to trade and to growth. The Copenhagen meeting underlined the need for the Community to play an active part while preserving the European identity throughout the negotiations. We also stressed that it was essential to relaunch the multilateral process in Geneva as soon as possible on all topics, including agriculture. This is in line with the position I set out here recently which I also put before my colleagues in Copenhagen. We want an agreement, but it must be balanced and equitable, and cannot unduly impact on one or two countries.
All in all, on the key economic issues this was a workmanlike summit which took some useful decisions and initiatives that will have impact in the near term and which also agreed to work towards early adoption of a jobs-focused strategy to tackle more deep-seated structural problems inhibiting employment creation.
The meeting also dealt with many other subjects, including political issues of profound importance for the Community, the European continent and the world as a whole, especially the tragic conflict in the former Yugoslavia. These will be dealt with in the concluding statement on behalf of the Tánaiste.
It was agreed that current enlargement, to include Austria, Finland, Norway and Sweden, should go ahead at the beginning of 1995 on the basis of the guidelines laid down by the Lisbon and Edinburgh European Councils. It will be recalled that the former of these decided that this enlargement is possible on the basis of the institutional provisions contained in the Maastricht Treaty and attached declarations, that is to say, without any fundamental institutional changes. The criteria on which the more advanced countries of Central and Eastern Europe might join some time in the future is set out.
I met the British Prime Minister in London on 16 June to review Anglo-Irish relations, issues relating to the European Community in the run-up to the European Council Meeting in Copenhagen, and other matters of mutual concern to our two countries, in accordance with our agreement to hold half-yearly meetings. I was accompanied by the Tánaiste and Minister for Foreign Affairs, Deputy Dick Spring, and the Minister for Justice, Deputy Máire Geoghegan-Quinn. The Prime Minister was accompanied by the Foreign Secretary, Mr. Douglas Hurd, M.P., and the Secretary of State for Northern Ireland, Sir Patrick Mayhew, M.P.
The Prime Minister and I reaffirmed the determination of our two Governments to continue to co-operate closely on Anglo-Irish relations and to build on our joint commitment to the Anglo-Irish Agreement. We noted the extensive co-operation which exists between North and South on economic and security matters, and we welcomed the full programme of work being carried out in the Anglo-Irish Conference in that regard. We deplored the acts of terrorism which have led to deaths and injury. We pledged to sustain and improve security co-operation on both sides to ensure that violence is counteracted and the perpetrators brought to justice. An acknowledged very high level of security co-operation has yielded significant successes in the recent past. Both Governments are totally at one in our resolve that the political destiny of Northern Ireland will not be determined by the use of violence as a means to achieve political objectives, something it has failed to do over the past 25 years. There is an overwhelming commitment to the political process across virtually all political persuasions on these islands, which must now be accepted and acted upon by everyone.
The Prime Minister and I reviewed the prospects for a resumption of the Northern Ireland talks process, the objective of both Governments. The Programme for a Partnership Government committed the Government to work for an early resumption of political dialogue, with the aim that all of the relationships involved will be addressed in a spirit of openness and innovation. The Government are ready to discuss every issue and to incorporate all agreed changes in the context of an overall settlement. Consistent with the agreed basis for the talks as set out in the 26 March 1991 statement, the Prime Minister and I agreed on the need to comprehensively address all aspects of the key relationships involved in a manner which would accommodate the rights and identities of the two main traditions on this island. Both Governments are determined to do everything possible to bring this objective to fruition. It is of paramount importance that all parties to the process now proceed with renewed commitment and vigour to achieve the political progress which is so widely desired by the peoples of both islands.
The Prime Minister and I agreed that the most immediate objective must be the creation of a durable and meaningful peace so that future generations may be spared the violence which has been inflicted upon the people of Northern Ireland over the past 25 years. As the Prime Minister, Mr. John Major, emphasised at our news conference:
That is a shared wish not just between the Taoiseach and with me, that is a shared wish I think amongst the overwhelming majority of people in both parts of the island of Ireland.
A political accommodation within the three-relationships framework is necessary to the laying of firm foundations for a lasting peace. The Programme for Government commits us to seek any necessary endorsement in a referendum for an agreed package, which achieves a balanced accommodation of the differing positions of the two main traditions on constitutional issues. Our position, as set out in the programme is a generous recognition of what is realistically viable in this area. The Government's policy approach is based upon the reality that a durable settlement requires the establishment of political arrangements to which each tradition can give unequivocal allegiance. It is this objective which guides us in our search for political progress.
The provisions of the Anglo-Irish Agreement of course will continue to operate fully, unless and until it is transcended by new agreed arrangements. At our meeting the Prime Minister and I called on the constitutional political parties in Northern Ireland to join with us in the search for progress with a view to achieving a lasting settlement. We agreed to remain in close contact regarding political developments in Northern Ireland and to meet again in Dublin in the latter part of the year. There will also be continued contact at official and ministerial level to ensure maximum understanding between both Governments in matters which are for decision by the two Governments.
The meeting also covered European Community issues arising in the context of the European Council Meeting in Copenhagen, including unemployment, enlargement, GATT, subsidiarity and foreign policy matters affecting Bosnia, Somalia and Sudan.
I have had placed in the Dáil Library the joint communique issued following the meeting.
