Ireland To Hold Referendum on Fiscal Treaty
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Ireland, who was among the first few countries to buckle under the weight of its debt, will hold a referendum on a new EU fiscal treaty that includes tougher budget rules for members of the currency bloc.
Irish prime minster Enda Kenny previously said he would sign the treaty at the end of a EU summit meeting this week, but the state’s attorney general stepped in to say a referendum was necessary to ratify the pact.
With the referendum, implementation of the new pact could potentially be delayed.
Ireland, who was among the first few countries to buckle under the weight of its debt, will hold a referendum on a new EU fiscal treaty that includes tougher budget rules for members of the currency bloc.
Irish prime minster Enda Kenny previously said he would sign the treaty at the end of a EU summit meeting this week, but the state’s attorney general stepped in to say a referendum was necessary to ratify the pact.
With the referendum, implementation of the new pact could potentially be delayed.
Furthermore, it is not the first time Ireland has rejected EU treaties through referendums, forcing controversial second votes that resulted in long delays prior to approval.
Without Ireland’s support of the EU treaty, analysts question the country’s commitment to the euro and say the future of Ireland’s long-term funding prospects remain cast in doubt.
Kenny told parliament:
[quote] “I am very confident that, when the importance and merits of this treaty are communicated to the Irish people, they will endorse it emphatically by voting ‘yes’ to continued economic stability and recovery. [/quote]Related News: Ireland’s Painful 2012 Budget: 23 % VAT, €3.5bn in Spending Cuts
Under the proposed EU treaty agreed last month by 25 of the 27 EU members, ratifying members are required to keep their deficits within 0.5 percent of their GDPs, barring exceptional situations such as severe recessions or an existing bailout agreement.
The United Kingdom and the Czech Republic who are both not euro members are not subject to the requirements.
Ireland’s return to mild economic growth last year and its success in meeting bailout targets has kept it in favour with the EU and IMF.
However, a rejection of the treaty by the Irish people would likely change their fortunes. A ‘no’ vote from the Irish people would bar the country from receiving funds from the European Stability Mechanism once its current bailout funds run dry by the end of 2013.
As the Associated Press reports:
[quote] Ireland’s adherence over the past year to an EU-IMF austerity plan has helped boost the value of Irish bonds, raising hopes of an Irish return to normal borrowing in 2013. But the sheer volume of funds required to finance Ireland’s deficits and bank-rescue program leaves open the prospect of a second Irish bailout next year. [/quote]Related News: Ireland Makes $4.6 Billion Return To International Bond Market
Related News: U2 to Invest in Music Study as Ireland Cuts Spending
