As a result, however, Ireland has to take heed of European Union thinking and indeed authority when it comes to economic matters.
So it was an attentive Ireland last week that was told last week that “hard decisions” would have to be made by the Irish government in the face of the severe economic challenges besetting an economy that, until recently, was held up as an example for the rest of the world to follow.
Jean-Claude Trichet, head of the European Central Bank, told his audience in Dublin, all of them members of the Institute of International and European Affairs, that he was yet optimistic about the prospects for an Irish economy that has lately hit a wall.
This was contingent, however, on the Irish government adopting an economic policy that convincingly reduced future public deficits and recovered lost competitiveness.
The Irish economy would then be “well placed” to benefit from the eventual recovery in the global economy because of its open nature, he said.
“Repeating his call for wage restraint, Mr. Trichet said it was vital that euro zone governments and social partners take account of competitiveness and labor market conditions when setting wages ‘in a responsible and timely manner’, while national authorities should ‘pursue courageous policies of spending restraint’ in order to minimize job losses,” the Irish Times reported.
“We surely do not want to lose human capital, or scar a large proportion of the people of working age,” Trichet said.
Trichet also urged governments to resist introducing measures that hindered free competition, cross-border trade and protectionist measures.