Letter in the Spectator, 16 October 2010
Allister Heath may be right that Ireland experienced lower interest rates over the last ten years than was beneficial as a result of euro membership, (“The Irish problem”, 9 October) but it is not true that the Irish property market inevitably boomed and crashed as a result. There is much more to regulating the housing market than just setting interest rates.
For instance, common sense went completely out of the window when it came to granting planning permission. At its peak, Ireland was building 81,000 new houses a year. Who would buy all of them? In the UK, a country with 13 times the population, the number was only 185,000.
In Ireland today, the best estimate is that housing supply exceeds demand by 25 per cent – 300,000 houses lie empty. That’s not because of the euro, but because domestic policy makers took their eye off the road.
Joining the euro does not remove from politicians the obligation to follow wise policies. The root cause of the Irish problem is that some of them thought it did. And remember that we have had a similar boom and crash experience here in the UK, and you can’t blame euro membership for that.