Northern Ireland’s Finance Minister Sammy Wilson said there may be “certain advantages” in the Republic of Ireland leaving the euro region, as the crisis enveloping the currency intensifies.
The German government suggested yesterday countries should be allowed to leave the euro if staying in it becomes too tough, and German Chancellor Angela Merkel’s party voted to allow euro states to quit the currency area.
“I see certain advantages in that,” Wilson said in a telephone interview yesterday. “One way of stimulating their economy is if they have greater freedom. In 1992, the U.K. was told if it didn’t stay in the Exchange Rate Mechanism all kinds of disasters would befall Britain. They didn’t. There are lessons there.”
Merkel and French President Nicolas Sarkozy raised the prospect of a state dropping the euro last month when they said then-Greek Prime Minister George Papandreou’s planned bailout referendum would be a vote on euro membership. Wilson said it would be better for the global economy if an “orderly dismantling” of the euro region took place.
“The longer this goes on, the more dodgy debt piles up and it creates banking uncertainty,” Wilson said. “I don’t think it would have a terrible effect on the U.K. if it collapsed. It is totally inevitable.”
Ireland’s government has refused to countenance any possibility of exiting the euro, and plans 3.8 billion euros ($5.2 billion) of tax increases and spending cuts in 2012 to narrow its budget deficit as it seeks to regain its economic sovereignty.
The U.K. contributed to Ireland’s 67.5 billion-euro bailout last year, which the nation was forced to seek after its banking crisis became too big to handle alone.
Wilson is pushing the U.K. government to give Northern Ireland power to lower its company tax rate to a level equal to or below the Republic of Ireland’s 12.5 percent.
Wilson said the British government may be delaying a decision on devolving corporation tax to Northern Ireland on concern that Scotland’s government may seek the same power. Northern Ireland remained part of the U.K. when Ireland won independence in 1922.