Minster for Finance Paschal Donohoe has said economic co-operation between Ireland, the European Union and the United States is at a new high point.
Speaking in Washington DC after a joint meeting of the Eurogroup finance ministers and US Treasury Secretary Janet Yellen, Mr Donohoe, who chairs the Eurogroup, said: “What we have done over the last two years is on really critical areas of economic co-operation where we needed to do more – whether it’s tax, whether it’s trade, whether it’s how we respond back to the pandemic.
“We have significantly and profoundly deepened the co-operation between Ireland and America and between Europe and America, and I believe this will deliver really important long-term economic benefits.”
European and US finance ministers committed to work together to overcome the economic challenges posed by the Ukraine war, both in their own countries and in Ukraine itself, where Europe and the US have pledged to continue financial aid to the Ukrainian government to fight the war and run the country.
In a statement after the meeting, Ms Yellen said she had “discussed the economic impact of Russia’s war against Ukraine and weaponisation of energy.
“The Secretary also stressed the importance of the price cap on Russian oil to stabilise energy markets and reduce revenues to Russia, highlighted the necessity of accelerating economic assistance to Ukraine, and encouraged continued progress on international tax reform.”
Minister for Finance Paschal Donohoe and US Treasury Secretary Janet Yellen
Mr Donohoe said the impact of the war, and its financing, were of vital importance because allowing the Russian invasion to succeed would undermine the basis of international relations including trade and economic co-operation.
He said: “While we recognise that as vital as issues of economics and sustainability are to the work that we need to do, what is overarching all of this is the fact that another country has been invaded. And if we give way to that kind of aggression, it will pose such a severe blow to international co-operation, to order in the future, and the respect of each other’s national borders: and those are all pillars upon which economies rest.
“If we don’t have agreement regarding the very basic rules of respect for each other’s borders, and how we can engage and cooperate with other countries and not use the threat of violence and not use the threat of war, the ability for economies to cooperate and grow in the future could indeed be fatally undermined for many years to come.”
“While there are economic issues, or there are tough and demanding issues regarding how we pay for this war and how we pay to support the people of Ukraine, the resolve and determination to do that is there because what we realise is that what is at stake here is so fundamental to the future of Europe and even to our world.”
After an exchange of views on the difficulties the EU and US economies are facing over the coming year, Mr Donohoe said the two sides recognised the challenges are going to be “here for much longer”, and that policy co-ordination is needed as countries can cause spillover effects into other countries.
Asked about the effect of the stronger dollar against the euro, Mr Donohoe said: “It didn’t come up in the meeting today. The reason why it didn’t is that we understand and recognise the role of market forces in determining the values of different currencies.
“And if you look at all of the different issues that we have that are influencing the value of the euro, and inflation within the European Union, the common issue, underpinning both of these is the fact that it is Europe that has a war under way in its borders.”
He also said monetary policy within Europe is “appropriate to our inflation trends”.
Asked about the situation in the UK, and the sacking of Kwasi Kwarteng as finance minister and replacement by Jeremy Hunt, Mr Donohoe said: “Recent weeks have just emphasised yet again to me the profound importance of financial market confidence in the economic planning of countries.
“It is why we made such huge efforts to ensure that in Budget 2023 and Ireland would not have to borrow to fund the plans that we have for next year.
“It’s why I also decided to put €6bn into a national reserve fund, not only to manage the risk of what could happen to corporate taxes in the future, but also to send out a very clear signal to markets regarding how we are making our own budgetary decisions.
“I wish the new chancellor Jeremy Hunt every success in his new on very important office, and I look forward to meeting him and co-operating closely.”
Mr Donohoe had been scheduled to meet Mr Kwarteng in Washington yesterday, but the former Chancellor of the Exchequer returned to London overnight Thursday.