Navigation path

Impact of EU membership on Ireland
E-mail this pageE-mail this pagePrintPrint

The decision by the vast majority of the Irish people to join what was then the European Economic Community (EEC) in 1973 has had an impact on our development as a nation that not even the most optimistic observer of the time could have predicted.

See below for information on how EU membership has impacted on the following:

Impact on Ireland's economy

Developments on Dublin's Liffey docksMost experts agree that Ireland’s membership of the European Union has greatly facilitated our move from an agricultural based economy to one driven by hi-tech industry and global exports.

Back in the 1950s, while many other European nations were benefiting from a phase of rapid post-war industrial based recovery, Ireland’s economy was struggling badly.

Unemployment was rife leading tens of thousands of workers to leave home and seek employment overseas. Between 1951 and 1961 the net loss of Irish citizens to emigration was over 400,000 and the population dropped to just 2.8 million.

In a world where industrial trade and international co-operation was becoming the norm, Ireland’s mostly agricultural export market was completely dependent on selling to the UK, which itself was one of the slowest growing western nations after the war.

To make matters worse, while most countries protected their agricultural sectors Britain’s policy at the time was to allow overseas farm products into its market at low prices in order to keep food prices at a minimum.

Low food prices meant low wages and this helped the UK’s manufactured export industry remain competitive, but there was little advantage to Ireland in selling its farm produce at prices that left little room for profit.

In the 1960s Ireland had begun to move away from its traditional but outdated economic policy of protectionism, which restrained trades between states by way of tariffs, largely thanks to measures adopted from a study on economic development compiled in 1958 by officials at the Department of Finance led by one of Ireland’s greatest economists, Dr TK Whitaker .

The nation was preparing to move towards a free market economy, and being a part of the developing European Economic Community was seen as a crucial step in creating a new economy.

Despite moves to boost other industries, agriculture remained the country’s most important trade sector and EEC membership in 1973 meant it could prosper like never before.

The EEC’s Common Agricultural Policy provided farmers with a single price level for selling goods that was fixed at a much higher rate than what was available in the only market open to them at the time –the UK.

While improvement of the agriculture sector under EEC membership had been expected, its impact on the development of other parts of the economy was less anticipated.

The opening of continental markets to locally made industrial products enabled Ireland to attract substantial industrial investment in manufacturing while structural funds from Europe helped improve roads and public transport. There was also money made available for training schemes which helped upskill the workforce.

The economy began to develop and the net outward flow of emigration reversed. During the 1970s around 100,000 immigrant Irish workers and their families returned home and this coupled with a rising birth rate helped the population to grow by over 400,000 in ten years.

Jobs in protected industries were lost, but new and better paid work was created through foreign investment in manufacturing sectors like pharmaceuticals, metals and machinery.

This in turn led to more employment in business services and Ireland started to shift away from dependence on agriculture.

The new market environment together with decisions to introduce low corporate taxes and develop an Industrial Development Agency (IDA Ireland) to promote Ireland abroad enabled Ireland’s new economy to flourish.

Irish business was at last able to trade and compete on an equal footing in markets outside of the UK. And when the continental market was opened up to Irish goods, the country also became attractive to US owned multi-nationals investors and, to a lesser extent, investors from other non-EEC countries.

Like the rest of the EEC members, Ireland was not immune to global factors and two major oil crises in the 1970s, coupled with what were in retrospect poor budgetary policies by successive Governments led to a return to high unemployment and emigration.

However, with the help of funding from the EU, Ireland’s infrastructure had been substantially developed and education standards improved making the country even more attractive than in the 1970s for outside investment when financial policies changed and the world economic downturn reversed.

The current world-wide economic crisis is another challenge, but thanks to Ireland’s transformation into one of the world’s most successful economies during the late 1990s and the early years of the 21st century, the country is in a better position than most to benefit from recovery.

THE SINGLE EUROPEAN ACT

During the 1980s business and political leaders across Europe became increasingly discontent with economic policy discrepancies between the EEC family of nations.

The European common market, established by the Treaty of Rome in 1957, had made trade easier, but the creation of a single market would help remove barriers to the movement of labour, capital, goods and services between member states.

The Single European Act abolished national vetoes in areas relating to the single market and it gave more powers to the European Parliament. It was the beginning of the European Union as we know it today.The act was signed in Luxembourg on February 17 1986, and in The Hague on February 28 1986.

The Irish Government at the time, led by Charles Haughey , was eager to sign up to the act which was supported by most of the opposition parties as well as employers’ and farmers’ representatives.

However, a Supreme Court challenge confirmed that the constitution needed to be amended before the act could be brought into force and so the nation was asked to vote on the change.

A referendum on the issue held on May 26 1987 was passed, with 69.9 per cent of voters supporting the amendment.

The amendment was signed into law on June 22 and the Single European Act came into effect on July 1 1987.

The Single European Act committed member states to creating and developing the European Union as we know it today.

Top

Impact of Euro on Ireland

Despite having gained independence five decades earlier, Ireland was still economically dependent on Britain by the time the country became an EEC member state in 1973.

Over half our goods went to the UK and our currency remained linked to British sterling.

High inflation in the UK began to threaten price stability in Ireland, making a proposal for a European Monetary System (EMS) that was being discussed between member states seem very attractive.

The idea was based on a study compiled in 1970 by experts led by Luxembourg’s Prime Minister Pierre Werner. The Werner Report recommended fixed exchange rates between EC member states and the European Exchange Rate Mechanism (ERM) was finally set up in 1979 after the idea was initially delayed due to international currency unrest caused partially by a global oil crisis in 1973.

After a shaky start, price stability in Ireland was eventually delivered by EMS membership. Inflation fell below five per cent in the mid 1980s and short-term interest rates dropped lower than in the UK for the first time.

In 1989 a new report from an expert committee headed by then President of the European Commission, Jacques Delors , proposed moving to full Economic and Monetary Union (EMU).

EMU began in 1990 but in order for it to be completed a new treaty between member states was required.

For the second time since becoming a member state, Irish voters were asked to decide on the country’s future in Europe. The Treaty of Maastricht had the support of the four main political parties and when the polls closed on June 18 1992, almost 70 per cent had voted in favour of the new agreement.

However, it wasn’t all plain sailing towards monetary union. Italy and – more importantly for Ireland – Britain were both forced to withdraw their currencies out of the ERM due to their inability to keep within exchange rate limits.

The Irish pound came under pressure but held, and had stabilised by the time European leaders met in Madrid in December 1995 and confirmed January 1 1999 as the starting date of the final stage of monetary union.

The European Central Bank was established, exchange rates were fixed for good and the euro became the official currency of 11 member states including Ireland.

At the beginning it only existed in ‘virtual’ form but on January 1 2002 euro banknotes and coins were introduced and the Irish pound was phased out.

There are now 15 EU countries using the euro as their official currency, making life easier for both Irish businesses and travellers trading or visiting in what has become known as the euro zone.

 

References

• Kelly, John (2003): The Irish Pound: From Origins to EMU – Central Bank Quarterly Bulletin, Spring 2003

• Fitzgerald, Garret (2002): The Economics of EU Membership – Thomas Davis Lecture Series, RTE 2002

• Kennedy, Kieran Anthony; Giblin, Thomas; McHugh, Deirdre (1988): The Economic Development of Ireland in the Twentieth Century

Top

Impact on education in Ireland

Students in front of Trinity College, DublinIrish students have more opportunities than ever before to broaden their horizons and get the qualifications needed for top jobs thanks to the European Union.

Funding from the European Union over the past three decades has helped improve education standards in Ireland but there are still significant benefits to studying abroad.

Students improve their language skills, experience a different culture and may even give themselves an edge when it comes to applying for skilled jobs.

In May 2009 EU member states including Ireland adopted a new framework for cooperation to reform education and training systems in order to make it easier to move, study and upskill in any of the 27 EU countries.

The new framework places a new emphasis on lifelong learning and aims to make it easier for Irish citizens to benefit from overseas educational opportunities from early childhood through to higher education, vocational training and adult learning.

But even students who choose to stay at home benefit from EU programmes designed to develop knowledge and understanding.

The programmes are all part of the European Commission’s Lifelong Learning Programme which has a budget of almost €7 billion for the years 2007-2013 set aside to be spent on various educational and training initiatives.

Thousands of young Irish school pupils and their teachers take part in the Comenius Programme while older students and higher level institutions can team up with universities and colleges throughout Europe through Erasmus.

In the three years from 2004-2007 a total of 4,663 Irish students moved abroad and studied in other EU countries as part of the programme[1].

Business studies, followed by languages, social sciences and law proved to be the subjects favoured most by the Irish.

Around 90 per cent of European universities take part in Erasmus and 1.9 million students have participated in the programme since it started in 1987[2].

The annual budget is in excess of €400million and more than 3,100 higher education institutions in 31 countries take part in Erasmus.

Other pan-EU education initiatives include the Leonardo da Vinci Programme which aims to help Europeans acquire new skills, knowledge and qualifications and The Grundtvig Programme which focuses on the teaching and study needs of people in adult education and alternative education streams.

Irish third level institutions can also take advantage of the Jean Monnet Programme which has projects across right across the world reaching up to 250,000 students every year.

Pupils from second level schools across Ireland have taken part in several European Union sponsored debates and the European Union Science Olympiad (EUSO) which was founded in Ireland by Michael A Cotter to promote science in member states.

Top

Impact on the environment

Ireland’s environment needed improving almost as much as our economy when we joined the EEC in 1973 and tough EU rules meant we have had to act on water pollution, waste disposal, air quality, energy emissions and preservation of natural habitats.

Untreated raw sewage was being pumped into Dublin Bay and the EU provided cohesion funds to help end this scandal and assist with other large environmental projects such as main drainage schemes in Limerick, Cork, Drogheda and Wexford.

Over the years European Commission directives on the environment have had a significant, positive impact on Irish environmental policy. Irish legislators responded to directives in the 1990s with new laws on waste management and dumping at sea while budgets were put aside for dealing with rubbish and improving water quality[1].

Ringsend Water Treatment plant in Dublin received EU fundingImplementation of EU standards for waste management and drinking water has had its difficulties in Ireland but is improving stead

Ireland implemented a directive on recycling electrical waste and electronic equipment in August 2005[2]. The Waste Electrical and Electronic Equipment (WEEE) Directive has been hailed as a phenomenal success, with thousands of items of electrical and electronic waste going into proper recycling systems.

A similar directive on battery recycling came into force in October 2008 which will further reduce toxic waste in Ireland.

Ireland’s environment has also benefited from the European Union’s environmental policy through funding from LIFE (The Financial Instrument for the Environment) which was launched by the European Commission in 1992.

The last phase of LIFE funding saw EU funds totalling €13.6 million pumped into 48 Irish projects focused on environmental innovation and nature conservation.

Around €250 million has been allocated to the next phase of funding under, LIFE+, was launched in 2009 with a call for proposals from projects that benefit nature, biodiversity and environmental policy.

Irish residents with concerns about the environment can register complaints to the EU’s Environment Directorate-General and indeed the office gets more complaints from Ireland than larger member states such as the UK and Germany[3].


 

[1] EU Environmental Policy and Ireland – Bernadette Connaughton: Ireland and the European Union by Michael Holmes.

[3] EU Environmental Policy and Ireland – Bernadette Connaughton: Ireland and the European Union by Michael Holmes. Link

Top

Impact on people's lives

Shopping on Dublin's Grafton StreetLife in Ireland changed dramatically in the years following our decision to become part of the European community back in 1973 and today’s young Irish men and women have every reason to feel confident about themselves and their futures.

During the 1970s bombs and terrorism blighted the north of the country, our economy was in one of the worst in western Europe, unemployment and emigration were ripping communities apart and the average wage stood at less than £30 a week – that’s just €38.

Foreign holidays were far too expensive for most families and those that did go abroad were most likely parents leaving the country to find work to provide for their loved ones back home.

Even flights to our nearest neighbour, Britain, cost hundreds of pounds and studying abroad was a luxury only the very wealthy could afford.

Living standards in modern Ireland bear little resemblance to back then, and a lot of the improvements are a direct consequence of EU membership.

Today every Irish citizen has the right to live, work, study or retire in another EU country. And the Single Market has made it both affordable and safe. Being in the eurozone has made travelling and doing business abroad even easier.

Travelling across the world is cheaper than ever before thanks to deregulation of the airline industry across EU member states in the 1980s and Single European Sky legislation adopted in 2004 which restricted uncompetitive practices.

The European Aviation Safety Agency established by the EU in 2003 has also made flying safer and co-operation between member states through the Air Traffic Management System means it’s also more efficient.

So getting around Europe and the rest of the world is easier than it has ever been before, and the Irish are certainly taking advantage of their freedom of movement. Every year thousands of students leave Irish shores to take part in educational and training programmes thanks to the European Commission’s €7 billion Lifelong Learning Programme.

And Irish people in the business world also benefit from both freedom to move and the freedom to sell their goods and services. Border controls on goods within the EU have been abolishedand products legally manufactured in Ireland must be allowed to be sold on markets in all member states.

Irish citizens also benefit from the freedom to move capital which makes it possible to open bank accounts, buy property and invest in shares in all EU nations.

The Single Market has made trading in goods and services much easier and it’s also given more protection to consumers. In 2005 the European Commission adopted a new Consumer Policy Strategy which aims to eliminate risks on purchasing goods and services for all EU citizens.

Irish consumers can get advice and help at home from the European Consumer Centre Ireland.

Because we’re now more likely to travel, work and study abroad communication has become more important. A couple of decades ago most EU countries, including Ireland, had to make do with a public telecom monopoly but the EU insisted on the liberalisation of the communications market.

Now there are several providers in all countries, making phone calls cheaper and providing a choice of internet service providers.

And the days of expensive mobile phone calls within the EU are also coming to and end. EU rules introduced in 2007 have resulted in cheaper rates and from July 2009 a cap for sending text messages will see prices drop to a maximum of 11c.

Outgoing calls will cost no more than 43c a minute and receiving calls will also fall to 19c. A further reduction to 11c will come into force by July 2011.

Top

Impact on traditional industries

Agriculture

Cattle in a fieldMost people in rural areas know about the many benefits that the CAP has brought to Irish farmers since 1973. Some may remember all too well what life was like for farmers before EU membership. In fact, farmers have been the main beneficiary of direct EU funds in Ireland. Between 1973 and 2008 Irish farmers have received nearly €44 billion from the Common Agricultural Policy. Last year alone, Ireland received €1.8 billion directly from the CAP. As Ireland's economy has modernised, farm numbers have been going down, but the CAP has taken the edge off this. Without it, the process would have been much more painful.

Ireland has also received a further €10 billion since 1973 channelled through the Regional Development Fund and the Cohesion Fund. Most of this money has also gone into rural areas. (Structural Funds are extra to this.)

The original goal of the CAP was to make Europe self-sufficient in food. This was done by paying aid to farmers according to how much they produced. It is the only sector in the EU gets a direct aid paid from Brussels to each and every business. Direct farm aid has been what has allowed many family farms to stay in business. But during the 1980s, the EU ended up with almost permanent food "mountains" and it became clear that the bigger producers were benefiting in a disproportionate way. It was also accused of distorting international markets (though the EU was not alone in that).

Other European tax-payers wanted better value; the CAP had to change… and it did. The MacSharry Reform (under Irish Commissioner Ray MacSharry) of 1992 was the first big shake-up. Since then, EU governments agreed to un-hook financial support from production. This means that farmers are no longer paid just to produce food. Direct income payments continue but are linked to the farmer's role as guardian of the countryside, and to food safety and animal welfare standards. More information on Ireland and the Rural Development Plan is available here.

Reform of the CAP is gradual and the debate on the long-term future of the CAP is just beginning. However, its budget is guaranteed up to 2013. Ireland and the rest of the 'old' EU states still benefit disproportionately from CAP funding as just under 20% goes to the 'new' Member States.

The CAP costs about €55 billion a year or 40% of the total EU budget. This is less than 0.5% of GDP in the EU. The CAP is the only policy funded totally from the EU budget. See here for more information about the CAP.

Fishing

Rossaveal port facilities, Co. GALWAY, co-financed by ERDFIn line with the global decline in fish stocks, a reduction of the EU's total catch allowance and the temporary closing of some fishing zones, Irish fleets are - like certain species of wild fish- under pressure and in decline.

Ireland has benefited and continues to benefit from European Fisheries Funding. A total of €70 million was received during the 2000-2006 funding period, which was mainly used to support the decommissioning of fishing vessels and for investments in aquaculture.

For the funding period 2007-2013 Ireland is projected to receive EU funding of €42,266,603. This will go towards projects aimed at establishing a viable fisheries sector that respects the environment and towards supporting vulnerable coastal fishing communities.

Top

Impact on research

Research at the Martin Ryan Marine Sciences Institute, University of GalwayIrish researchers have benefited significantly from funding available under EU framework programmes.

The sixth Framework Programme for Research (FP6), which ran from 2002 to 2006, supported Irish research to the tune of approximately €200 million.

During this period, Irish researchers were particularly successful in getting funding for research training, career development and mobility schemes. Here, 162 Irish research participants received more than €54 million. Elsewhere, Ireland was also successful in areas such as ‘Information Society Technologies’ (over €42 million); ‘Nanotechnology and Nanosciences’ (nearly €21 million); and ‘Sustainable Development, Global Change and Ecosystems’ (€17 million).

Irish organisations were also active in coordinating and participating in projects under FP6. Some 891 Irish organisations were involved in 715 projects; 175 of these were led by Irish organisations.

The Seventh Framework Programme for research and technological development (FP7) will operate between 2007 and 2013. By October 2008, Irish research organisations had secured EC contributions of around 42 million Euros through FP7. The final figure is expected to greatly exceed this.

To date, under FP7 Irish research organisations have secured the following financial commitments:

-    ‘Information and Communication Technologies’ (20 million Euros),
-    ‘Health’ (over 5 million Euros),
-    ‘Food, Agriculture, and Biotechnology’ (over 3 million Euros).

They have also secured significant funding through ‘Marie Curie Actions’ for research training, career development and researcher mobility schemes (over €3 million), and ‘Research Infrastructures’, which optimise the use and development of the best and existing research infrastructures in Europe (over €2 million).

The Irish are the lead coordinators in 23 FP7 projects and over 160 Irish organisations are involved in 139 projects. Projects coordinated by Irish research organisations include:

The FUSION project, which is coordinated by the School of Chemical and Bioprocess Engineering (University College Dublin). Bringing together leading international researchers from a wide range of disciplines, FUSION aims to develop high-temperature gas separation membranes, based on newly emerging porous inorganic materials. Taking the case of the separation of CO2/Air as an example, the successful removal of CO2 from gas streams has, not only, huge commercial implications in the production of a purified CO2 gas stream as a product or raw material, but also very significant environmental ramifications, particularly in the light of EU obligations under the Kyoto Protocol.

The HILAS project, which is coordinated by the Aerospace Psychology Research Group at Trinity College Dublin. The objective of HILAS is to develop a model to make aviation safer. Human error currently contributes to 80% of all accidents involving commercial aircraft. Therefore, HILAS will help improve air safety, through changes in aviation technology and operating systems, aimed at designing-out, preventing and better managing the consequences of human error. Three other Irish companies are also involved in HILAS: SR Technics Ireland LTD, Shevlin Technologies LTD and Aircraft Management Technologies LTD.

Further information is available at http://ec.europa.eu/research/index.cfm?pg=nationalbrochures&lg=en&ctry=ie#map 

Top




Last update: 08/03/2011  |Top