Fianna Fáil leader Micheál Martin has described the announcement by the ECB of a programme of quantitative easing as a potentially significant development but one which must be accompanied by measures to ensure that European economic stimulus is felt by ordinary families.
“It is generally accepted that the US did a far better job at responding to the global financial crisis than Europe. Eurozone unemployment at 11.5% is nearly twice the US level and is falling much more slowly. The massive quantitative easing programme undertaken by the Federal Reserve has been a key component in the faster recovery enjoyed in the US. However the majority of gains have flowed to investors with stock markets rising to record levels. By contrast living standards have not kept pace with the growth in asset prices.
“Fianna Fáil’s concern is that the measures announced today could lead to a repeat of the US experience where the bulk of the gains from economic stimulus flow to those who are already well off. There is an urgent need for a far more co-ordinated response at European level to the economic crisis. To date the policy response has been piecemeal and more focused on optics than real delivery. There is a strong case to be made for a Europe-wide stimulus plan which would stave off deflation and tackle unemployment which is still close to record levels.
“Ireland is currently vulnerable to the potential impact of a further slowdown in the European economy. It was therefore particularly disappointing to hear Communications Minister Alex White recently state that Ireland does not have any “shovel ready” projects for participation in the planned €315bn European stimulus programme.
“If the European authorities want to take actions that can directly underpin the recovery in Ireland there are two measures they can approve immediately. First the pressure on the Irish Central Bank to sell the bonds it holds following the promissory note deal should be lifted. This would save us hundreds of millions on an annual basis freeing up resources for capital investment and improved services here. Secondly the ECB could allow Irish banks include their tracker loans books in the quantitative easing programme. This would immediately improve their balance sheets and allow them to lend to mortgage and other customers at lower rates. This would offer practical means of ensuring that the benefits from the ECB programme flow through to the real economy and the pockets of hard pressed families”.