Last night the “Paris Match President” Emmanuel Macron made a significant speech
about the future of Europe. In it he sets out France’s vision for the next generation. This is hugely significant for Ireland.
His speechwriters must’ve been up late as the German election result on Sunday night/Monday morning will have
put a spanner in Macron’s Gallic works. Macron had assumed that Merkel would have won easily and maybe had
to have another coalition with the federalist leaning SDP. This would have meant that Germany would be more willing
to go along with his more integrationist EU stance.
But it didn’t turn out that way.
Before we look at the redrawn political map of Germany, let’s consider what Macron’s original idea means for Ireland. Macron wants a single European budget, with a European finance minister, financed by the proceeds of a newly harmonized corporate tax across all the member state of the Eurozone.
This means Ireland changing its tax treatment for multinationals. This, in turn, means Ireland losing its capital base when then also would result in Ireland having no real competitive tax advantage when it comes to attracting inward foreign investment. Had this gone through, it would spell disaster for the Irish economic model.
Thankfully the rise of the Eurosceptic AfD in Eastern Germany and the likelihood of the free market FDP – largely from Western Germany – has knocked Macron’s plans on the head. In fact the FDP have made it a coalition condition that the new Merkel government will not table any motions for a new EU budget.
For now France is thwarted and the Irish can breathe a sigh of relief. But this all demonstrates just how precarious the Irish economic model is when we have to depend not so much on the kindness of strangers but on the randomness of their election results!
That being said, for the next few years at least, Ireland is in the clear.