Ireland’s Noonan hails May victory for removing ‘uncertainty’
By Bernard Purcell
Hopes are high in Ireland that the markets’ welcome response to incoming Prime Minister Theresa May are the first signs of a – relative – return to currency stability.
Mrs. May made her first public statement as Prime Minister designate in Westminster that “Brexit means Brexit” and there would be no going back on the UK’s departure from the EU.
Britain’s longest-serving Home Secretary is already well briefed on Northern Ireland and free movement between the UK and Ireland and is a frequent and welcome visitor to the Embassy of Ireland. She and Ireland’s Tánaiste and Justice Minister Frances Fitzgerald have already worked together on a breakthrough joint UK Irish visa scheme to encourage Indian and Chinese tourists to visit both countries on the one visa.
Ireland’s Finance Minister Michael Noonan, in Brussels, was among the very first to welcome her leadership victory and described it as “the first major step in taking uncertainty out of the system”.
Ireland and other EU governments had been bracing themselves for nine weeks of restlessness if the original Tory leadership campaign had gone to timetable with Mrs. May and Energy Minister Andrea Leadsom courting a few hundred thousand party members across the country. Ms Leadsom, who found herself criticised for inexperience, lack of both judgement and ability, and exaggerating her financial career and CV, reversed sterling’s remorseless descent – for how long, we don’t know – when she pulled out of the leadership race on Monday.
It came as the embattled Deutsche Bank, which has seen its own shares halve in value in the past year, said the predicted further 10 per cent fall in sterling’s value – it has already fallen by 14 per cent since last month’s Brexit vote – could bring UK inflation to 5.2 per cent. Sterling is already at lows in value against the dollar not seen since the mid-1980s when Margaret thatcher was Prime Minister and Ronald Reagan was US President.
Its weighted value against other currencies is already at post-financial crisis, 2011 levels. Before the referendum Bank of England inflation projections were 1.8 per cent by the end of next year.
Since the vote economists and analysts are in agreement that they expect to see economic growth cut back by nearly two per cent with the weaker pound meaning consumer prices rising by at least four per cent. And that was before predictions of further falls in value for sterling.
Launching her campaign in Birmingham on Monday Mrs May – who once told the Conservatives they were seen as “the nasty party” – that “there isn’t much job security out there”. She continued: “Some find themselves exploited by unscrupulous bosses and, yes, some have found themselves out of work or on lower wages because of low-skilled immigration. So many of our political and business leaders have responded by showing that they still don’t get it.”
In Brussels Ireland’s Finance Minister Michael Noonan said that his own embattled party leader and Taoiseach Enda Kenny’s “crisis management skills” are now needed more than ever as Brexit poses a potentially huge crisis for Ireland.
“His skills in crisis management and his international contacts are very important. For example he is going to to meet Chancellor Merkel. He’s meeting (France’s) President Hollande in Ireland the week after.
“There’ll be a new British prime minister… and it’s very important that somebody who knows them well and can make contact at the end of a telephone has built up the relationships that are n necessary. “Brexit is going to take a while to sort. It’s probably a two-year period and we need somebody who understands crisis management and understands international negotiations and as I say we’re fortunate to have him and needless to say I stand four-square behind him.”
Mr. Noonan said official calculations had shown that Brexit would reduce Irish growth rates by 0.5 per cent in 2017 but stressed this was only an estimation. “What we cannot calculate yet is what the new arrangement between the UK and the European Union would be.”
He said if the new UK-EU relationship was close to the current situation with Britain remaining in the Single Market and free movement of capital and labour continues, the impact will be “very little”. But a return to tariffs and WTO rules and the reintroduction of hard borders would have a “quite severe” impact.
“We foresee very complex negotiations which would need to be conducted by experienced people on our side,” he said.