Irish Finance Minister Michael Noonan acknowledged today that there would need to be an Irish referendum on the new €+-26 Treaty if it implied any change to the Irish constitution. Since an essential part of the Treaty is to introduce a German-style quasi-balanced budget amendment to constitutions, then of course there would be a change in the Irish constitution required. Noonan noted that such a referendum would effectively be upon Irish membership of the euro.
If / When such a referendum proceeds (assuming the euro doesn’t collapse first), the Irish would have the choice of staying in the euro, adopting a new currency, or joining a different currency union. Until the mid-1970s, Ireland was in a currency union with Britain (long after Irish independence). And of course it joined the EEC at the same time as Britain and shortly before the sundering of the currency union — so economic linkages swapped for currency linkages, easing the transition.
If Ireland were to leave the euro, and especially if the UK were to leave the EU or otherwise be in a looser relationship with the Eurozone, a natural alternative for Ireland would be to re-establish its currency union with the UK. Indeed, if Scotland had by then left the Union, Ireland’s status within such a currency union might be very similar to Scotland’s.
In the event of an Irish referendum, the British government would therefore face a decision. Should it aim to be “helpful” to the survival of the euro with current members by avoiding talking publicly about what Ireland might do if it left the euro? Or should it, instead, talk publicly about the options for Ireland outside the euro — by saying the Irish would be welcome to enter into a currency union with the UK?