Sir, George Osborne does Britain a disservice by leaping to conclusions drawn solely from Ireland without examining the evidence from other successful European economies, such as those of the Nordic countries (Comment, Feb 23).

Ireland is a unique case. It has got rich fast, with the help of substantial EU funds (more than 3 per cent of GDP for many years), by attracting foreign investment from companies wanting to set up shop in the EU’s lucrative single market. Its links to the US make it an obvious place for American firms to access the European Union. It now has the added attraction of using the same currency as much of the rest of the EU economy — a lesson, I suppose, Mr Osborne would not advocate for Britain.

It is true that Ireland has managed to increase public spending while cutting taxes. But that is because foreign investment has led to more people in jobs, and companies, paying tax. Also a good chunk of spending — which would otherwise have to be national government spending — has come from the solidarity of the European taxpayer. On top of EU regional funds, Ireland’s rural economy has benefited considerably from Common Agricultural Policy payments.

In most countries it is simply not possible to increase spending and cut taxes. In fact, Britain’s economy does very well compared with France, Germany and other large European states when it comes to foreign investment. It also has very competitive tax rates. On the other hand, in Ireland there is growing public concern at the high cost of living, the growing gap between rich and poor, and the very high and rapidly increasing costs of housing and deteriorating public services, especially health services.

Other countries, such as the Nordic nations, have managed to combine a competitive and wealthy economy with a strong welfare state, financed through high taxation. Danes pay Europe’s highest taxes and there is no great clamour to reduce them. This is because the revenues are invested effectively in education, training and income protection to assist people to move from yesterday’s job to tomorrow’s job.

Mr Osborne is right that high educational standards are vital for a competitive economy. That is the Nordic experience, too. The problem is that cutting taxes is rarely compatible with raising educational standards, and the only way to make it seem compatible is to look only at the unique current circumstances of Ireland.

POUL NYRUP RASMUSSEN
President of the Party of European Socialists
Prime Minister of Denmark (1993-2001)
Brussels

Sir, George Osborne’s paean of praise for Ireland was most flattering. He rightly pointed out many of the factors which have transformed this country in a few short years: emphasis on high-quality education, encouragement of research and development, low corporate taxes and the like.

However, he did not mention two which I suspect he might not find congenial, but which arguably have had the greatest long-term effect on the level of growth and productivity in the Irish economy. The first is the system of social partnership which, in various guises for well over 20 years, has provided a stable economic climate for employers by a system of quite rigidly centralised wage setting, and which has, latterly, incorporated elements of taxation and social policy in its formulation. This is the corporatist state, and it largely works because of its small scale.

The other factor is, of course, the euro. In the absence of British entry, Ireland is attractive to non-euro business as the only English-speaking country in the system. A not inconsiderable boost was given to Irish economic activity by the low level of interest rates that euro entry introduced but, more significantly, the favourable exchange rate when Ireland joined the common currency.

Of course, Mr Osborne does not address the downsides of such a rapid economic turn-around. But that is for another day. . .

IAN D’ALTON
Naas, Co Kildare

Sir, George Osborne cites three reasons for Ireland’s newfound prosperity. He does not include the stimulus provided by billions of pounds from the EU’s Structural Fund.

If this money has not been significant in Ireland’s progress, we should ask what the fund achieves. After all, we are one of the significant contributors.

RICHARD NICE
Longfield, Kent

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