Ireland should be helped to decouple from the euro and default on its debts, according to a Conservative MP.
Writing in today’s Guardian, MP for Clacton Douglas Carswell says that the move would be better for Irish growth prospects than the €90bn bailout currently being negotiated by Ireland, the EU and the IMF.
He writes: “We should change course and prepare to offer a dramatically different solution – help Ireland decouple from Europe and allow the country to default on its debts.”
He adds: “Instead, we are sinking billions into a temporary rescue of the euro that will prolong Ireland’s economic misery.”
Carswell writes, citing Argentina as an example, that decoupling from a currency and defaulting on debts had worked for other countries in the past.
He writes: “When the peso was decoupled from the dollar in 2002 and Argentina defaulted in 2002, it was free to grow again. Argentina has since been chugging along at an enviable 7 to 8 per cent annual growth each year since.”
He said the low interest rates set centrally by the European Union had “plunged Ireland into the economic abyss”.
Ireland will later today unveil a four-year austerity plan which includes cuts of €15bn.
He said: “Diehard euro advocates might ignore reality, but if Ireland had had interest rates set according to the needs of the Irish economy rather than wider eurozone, it would not be in this credit-fuelled mess today.”
Carswell also said the current European treaty puts the UK at risk of potentially unlimited eurozone debt liabilities and makes Britain a member of the euro as a “debt union”.
He writes: “Thanks to the small print of our existing treaty obligations, should Portugal, Spain, or even Italy now seek a bailout, our potential liabilities would be unlimited.”
He adds: “Allowing the break-up of the euro could prove less ruinous than paying to keep everybody in line.”