Promissory Notes Arrangement: Motion 13th February

I would like to join others in congratulating the Minister for Finance and his officials, Professor Honohan, the Taoiseach and the Tánaiste on this significant achievement, which silences the Jeremiahs, the naysayers and those who said what has been done could not be done. It is recognised outside the House that this is a massive achievement for the Government. This deal is instilling confidence in people and will be a huge part of the recovery of our country. It means in practical terms that in each of the next ten years, some €3.6 billion will not have to be paid in respect of a promissory note. The extension of the deadline from 2038 to 2053 is a considerable achievement. Anyone whose mortgage could be extended in such a way will appreciate that the effects of inflation – even though we are trying to curb inflation, it is inevitable that there will be a certain level of inflation – would make their repayments insignificant. In reality, the effects of inflation mean this is all but a write-down. It will involve borrowing €2 billion less each year. That will have substantial implications for our economy. The use of Government bonds means the interest rate we will be paying has reduced from 8% to between 3% and 3.5%. We will have an effective interest rate of 1%. One of the first implications of the quality of this deal is the decision by Standard and Poor’s to upgrade Ireland’s rating with immediate effect. The deal has been applauded by a range of reputable commentators, including the Financial Times and a number of domestic commentators.

I would like to mention a couple of the advantages of this deal. The implications for consumer spending of the fact that we will not need to cut as many front-line services or impose as many taxation increases will benefit the economy. In addition to not having to make cuts, there is the twin advantage of avoiding the potential depression of the economy. Therefore, it is of enormous assistance to the country. This deal will allow us to return to the bond markets. Ireland’s interest rates have fallen considerably in the past week since the deal was effected. The deal will increase confidence, which is intangible but is very important for the economy. It will serve as a boost to consumer confidence, confidence in our small and medium sized enterprises and confidence in the capacity of our lenders to lend again. Last week’s achievement was matched by the arrangement of a deal on the multi-annual financial framework for the EU budget over the next seven years. In that context, some €6 billion has been dedicated to dealing with youth unemployment. The deal Ireland has achieved under the Common Agricultural Policy is very significant, with just a minor downward adjustment. It is being held at the figure that was promulgated throughout last year. That has to be significant for our economy.

The big challenge is to translate all of this into an attack on unemployment. I hope the Minister will address this in his reply. I do not need to remind the House of the impact of unemployment on the dignity of the human being. In addition, a saving of €20,000 per annum is made every time a person comes off the live register. I hope we can translate last week’s success into an effort to deal with unemployment. The unacceptably high level of youth unemployment needs to be addressed too. It is very encouraging that the youth guarantee, which ensures young unemployed people get training and education, has gained traction and is being supported in the EU. The big challenge is to translate this deal into jobs by using the money that would have been paid on the promissory notes, on interest or on other borrowings but is now available to the Government to create the conditions that incentivise employment. The very existence of this deal will stimulate and create confidence in the domestic economy and thereby generate jobs. We should be very proud of this good news story. It should be endorsed in this Chamber, just as it has been endorsed by people outside the Chamber to whom I have spoken, including all reasonable commentators and the general public. If we match that endorsement and build on it for the sake of this country, it will be a good day for Ireland.

Senator Joe O'Reilly representing Cavan & Monaghan 2010. | An ExSite website