IT'S a done deal. When questioned on the debate about whether the pound should enter monetary union, Ruairi Quinn is fond of pointing out that we did, after all, vote for monetary union when the people overwhelmingly approved the Maastricht Treaty in 1993. There is, we are told, no going back.
This may not be the case. After all, Sweden, which has no formal opt-out of the single currency, appears unlikely to join.
But all the main political parties here back membership. It looks like the single currency is going ahead and we will be in. But there has been precious little debate about what happens after we join and the enormous implications for Government policy and for business.
There are two crunch questions. One is whether we can build enough flexibility into the economy to be able to cope with the inevitable times of economic turbulence. And the other is whether Ireland can maintain the kind of long-term productivity performance necessary to prosper as a member of the single currency.
The flexibility issue is vital. Movements in the value of the pound will no longer be able to act as a shock absorber for the economy, and power to adjust interest rates will move to the EU central bank. So the only instrument available to the Government to influence the overall level of economic activity will be the Budget, and even here movements will have to be within the limits set down by the rules for members of the single currency club.
The worry is that heading into monetary union over the next couple of years, the Minister of Finance of the day, instead of having budgetary flexibility, will instead find himself hemmed in. The level of Exchequer borrowing may be low at the moment - probably less than 2 per cent of national output next year - but Government finances are being supported by the booming level of economic growth.
As Mr Jim O'Leary, of Davy Stockbrokers, pointed out in a recent paper, the EU Commission calculates that what it calls the structurally-adjusted deficit - what it calculates the level of borrowing to be if economic growth returned to average - is 3.6 per cent of national output. This is well above the 3 per cent level in the Maastricht Treaty which will also apply inside monetary union.
A much more ambitious programme of reducing Exchequer borrowing is needed. Otherwise the Government may have no guns in its policy armoury inside monetary union.
Needless to say, another expensive public pay deal is the last thing the Government can afford. Officials calculate that granting the same 9.25 per cent as for the private sector over three years would - when increments and carryovers from the PCW are counted in - would cost no less than 18.5 per cent. This would completely hamstring the national Budget moving into monetary union.
Flexibility will also be the watchword for individual companies. Exporters to Britain, for example, will have to be prepared to cope with an exchange rate to sterling which could swing around much more than at present - quite possibly between 85p sterling and 115p sterling. But the new wage deal, which covers the first year of EMU, appears to have no element of flexibility built in to deal with this, beyond the normal inability to pay clause. It seems to be a case of sign up and hope the boom continues.
Major issues must also be addressed about the ability of the economy to compete in the long-term inside a single currency. The tax system is still in need of radical reform. And a State claiming to be fit enough to join the single currency should not have sought a derogation from full competition in the key telecommunications sector until the year 2000. It's like saying on the one hand we're able to compete, but on the other maybe not.
If we really intend to join the single currency club, it is time to start planning for the consequences. Otherwise we risk ending up vulnerable and exposed inside monetary union.
