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Time to lift this gag on future role of the euro

The idea of leaving the euro is one of those things we in the Republic are not supposed to talk about.

It is too dangerous. It is a matter of judgment how much risk is worth running in the interests of open debate .

But, surely, the same thing cannot be said of talking about staying in the euro? Yet the blanket of silence on that is, if anything, even more complete.

I recall being asked, in 1999, when we would know if the new currency was a success. I replied '10 years from now'. Slightly more than 10 years on, it is still far from clear - but the question is becoming urgent. If we adopted a vow of silence, others will keenly apply their analysis of the outlook for the euro to the Republic's situation.

Actions, of course, speak louder than words and actions to date have conveyed a message which has, to some extent, been heard.

The tensions in the euro area are manifesting themselves in three member states in particular - the Republic, Spain and Greece. The focus is on fiscal positions and only the Republic has taken dramatic action to curb its deficit. That has been interpreted as a statement that the country is prepared to endure the severe recession which membership of the euro requires.

To argue that classic stimulatory policies should be followed, rather than the deflationary ones actually being pursued, is to ignore the implications of the decision taken 11 years ago.

The unpalatable fact is that membership of the euro was the mechanism for our extraordinary bubble, and made the inevitable burst even more damaging. Given that fact, the fundamental question which must be faced is whether such a fate was inevitable, or could it have been, if not avoided, at least reduced in scale.

Could better policies - devised specifically for euro membership - have averted catastrophe? Until we have decided the answer to that, we cannot make rational decisions about the country's long-term strategy.

Was it possible for the Republic to say: "Well, we won't borrow your savings" - or at least do something more sensible with the credit. It would help if the leaders of Europe got serious about managing their Great Experiment properly. There seems little chance of that, so a country like ours must swim against the economic tide such imbalances create.

It certainly has to try. It must select economic targets to replace the ones it lost when it joined the euro. The best was the trade-adjusted value of the currency, which the Central Bank was able to maintain during the 20 years between the end of the link with sterling and the arrival of the euro.

The bank, for some reason, has recently stopped publishing the inflation-adjusted exchange rate in its quarterly bulletins. It should think again.

The Newry business has finally brought home the point that we cannot ignore currency developments and that it must make domestic adjustments in response to sterling movements.

The rise in sterling, for instance, could have been met with higher business taxes and lower consumption taxes to modify the higher growth and inflation consequences.

Yes, I can see the problem. But even that is not the end of it.

The only other lever of economic management, apart from taxation, in a monetary union is incomes. These are far from perfect substitutes for a targeted real exchange rate. But euro or no euro, that option might not be available anyway. The exigencies of the crisis mean such ideas are not relevant just now.

But nothing which would address the strategic difficulties we face is on offer from any political party or social partner. Even if we prefer not to mention it, sooner or later - probably sooner - others will begin to notice.