Ireland backs EU fiscal pact

Irish voters have backed the EU fiscal pact by a large majority, final referendum results showed yesterday, in what Prime Minister Enda Kenny hailed as a “powerful signal to the world”.

Sixty per cent of voters were in favour of Ireland ratifying the pact, which is designed to shore up the turmoil-hit eurozone by penalising countries that fail to keep their deficits in check.

“The Irish people have sent a powerful signal around the world that this is a country that is serious about overcoming its economic challenges,” Mr Kenny said after the final ballots were counted.

“The clear and decisive verdict of the Irish people will help to create the stability and certainty that investors in Ireland need.”

The result comes as a huge relief to Mr Kenny’s debt-laden government as only countries that ratify the pact will have guaranteed access to the EU’s new permanent bailout fund.

It will also spare the EU a headache, as a “no” vote could have fuelled a growing backlash in Europe against austerity measures.

EU president Herman Van Rompuy hailed the vote as a key step towards Europe’s economic recovery.

“This result is an important step towards recovery and stability,” he said in a statement.

German Chancellor Angela Merkel welcomed Ireland’s backing of the fiscal pact as “good news for Ireland and Europe”.

Ireland was forced to accept an €85-billion bailout by the EU and IMF in 2010, and the “no” camp sought to harness public anger against the spending cuts and tax rises brought in as part of the deal.

Opponents labelled the fiscal pact an “austerity treaty” as it empowers the EU to fine countries that overspend.

“Some of the measures the government has had to take have been painful for our people,” Mr Kenny admitted in his speech in Dublin.

“I acknowledge the sacrifices that the Irish people are making, and have made, to contribute to the process of economic recovery.”

Mr Kenny said he had spoken to Mrs Merkel, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy yesterday about “a number of issues” arising from the Irish “yes” vote.

Although pre-referendum opinion polls had predicted a clear victory for the “yes” campaign, only half the 3.1 million-strong electorate turned out to vote, raising fears that the low turnout could help the “no” camp.

But most voters appeared to accept the government’s warning that if Ireland did not ratify the pact, it would not be able to access the European Stability Mechanism (ESM), the permanent rescue fund that comes into force in July.

Ministers have warned that they may need to access the ESM when Ireland’s current bailout package – which it required after its property bubble burst and the economy came close to collapse – expires in 2013.

Sonia Pangusion, analyst for Ireland at IHS Global Insight consultancy firm, said the “yes” vote was “good news for the future of the country”.

“It sends a positive message to the markets – a message that Ireland is determined to be part of the euro, assuming all the painful consequences of such decision.”

But she added: “Ireland’s citizens have become progressively unhappier with the way the austerity measures are undermining their incomes, and apathy about the euro project has clearly risen, judging by the low turnout.”

Ireland is the only country to hold a national referendum on the fiscal pact, which all 27 EU members have signed with the exception of Britain and the Czech Republic.

Although a “no” vote would have fuelled the growing campaign for Europe to focus on growth rather than belt-tightening, it would not have plunged the EU into crisis, as Ireland did in voting against two previous European treaties.

The fiscal pact could still have gone ahead without Ireland, as it needs to be ratified by just 12 countries to come into force.

Denmark on Thursday became the fifth country to ratify the pact after Romania, Portugal, Greece and Slovenia.

Mr Kenny said that the Irish government would now begin the process of ratifying the pact through its Parliament next week.