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		The luck of the Irish Lincolnshire Echo - May 7 2003 When I'm in Brussels, I usually wake up to the BBC World Service. If you make allowances for the BBC's soft-left, Guardianista bias, and its constant uncritical support for the EU, it still remains the best way of getting a quick up-date on the day's news agenda. One morning a couple of weeks ago I awoke to hear them doing a piece on the Czech Republic. They were trying to draw a parallel between the Czechs and the Irish, on the rather tenuous grounds that the Czechs apparently feel Celtic, and are fans of Irish pubs and Riverdance. The BBC simply asserted -- without discussion or analysis -- that the Irish "economic miracle" was the result of EU membership, so the Czechs could expect to do equally well in the EU. Of course the EU has dumped truck-loads of money on Ireland. Ironically Ireland's net annual receipts from the EU have been about the same as the UK's net contributions. We could cut out the middle-man and just write an annual cheque for £3 billion to Dublin. But according to my good friend Patricia McKenna, an Irish MEP, a much greater factor has been US investment. Ireland receives more US inward investment per capita than any other country. A recent study showed that 80% of US investors in Ireland had CEOs with Irish connections. So they come for family reasons -- and of course for the English language. Another factor is the currency. I've always regarded this as important, but I recently got a fascinating briefing on it from Anthony Coughlan, a Senior Lecturer at Trinity College Dublin. Ireland joined the EU at the same time as the UK, in January 1973, and it maintained its currency link with Sterling until 1979. But when it broke the Sterling link, it adopted the approach which Nigel Lawson famously tried. It decided to shadow the German Mark. This lasted until 1992. In September 1992, Sterling crashed out of the ERM (Exchange Rate Mechanism), on a day described then as "Black Wednesday". But leaving the ERM marked the beginning of a sustained economic recovery which continues to this day. Many of us now call it Golden Wednesday. Ireland clung to the D-mark exchange rate for a further four months. The Irish punt appreciated to £1.10, till Irish businessmen could take the pain no longer. Ireland then floated the punt, and the Irish economy embarked on its boom. There's a pattern here. Both Britain and Ireland embarked on a sustained economic recovery when they left a European currency straightjacket. Ireland's figures prove it -- the Irish growth rate doubled in the year the currency floated, because suddenly they had a competitive exchange rate against the UK and the US, with which they do most of their trade. But Ireland rejoined a European system -- the euro -- in 1999. So Ireland now has the wrong interest rate, as the European Commission itself has admitted, pointing to "unsustainable demand pressures". Dublin house prices have doubled in four years, inflation is running at 5%, and because Frankfurt sets interest rates, the Irish can do nothing about it. And now that the euro is strengthening (up to $1.14 as I write), the Irish economy is starting to feel the same pain it felt in 1992. The message is clear. Joining a European currency mechanism causes huge damage. Keeping a national currency -- whether you're a large economy like Britain or a small one like Ireland -- is the best policy. We don't need to speculate about it -- history proves it.