Irish voters say yes to EU fiscal treaty

Result should improve Ireland’s chances of attracting investment

DUBLIN

– Irish voters backed the European Union’s new fiscal treaty in a referendum on Friday, saving Europe a major headache but leaving the government little time to celebrate as problems across the euro zone continue to weigh at home.

The government had campaigned for voters to back the treaty, arguing that a rejection would hurt Ireland’s chances of attracting the investment it needs to recover and raise serious concerns about the country’s funding prospects.

Final results showed only five constituencies out of 43 voted “No,” with 60 per cent of the electorate coming out in favour.

“It’s a sigh of relief from the government rather than a celebration,” Transport Minister Leo Varadkar told reporters while watching votes being counted in Dublin.

Ireland has been held up by its European partners as the poster child for austerity, implementing a $106-billion EU/IMF bailout to the letter as others, notably Greece, remained the centre of euro zone debt concerns.

Yet Ireland desperately needs Europe’s woes to ease if it is to rack up the kind of export-led growth required to pay down its debt — set to peak at a dangerously high 120 per cent of gross domestic product next year — and ease unemployment.

The government’s attention can now return to a monthslong campaign to refinance 30 billion euros of bank debt. Deputy Prime Minister Eamon Gilmore said the country needed a deal and that the burden of Ireland’s bank debt had been a major issue on the doorsteps during the campaign.

Ireland is the only country that has put the fiscal treaty — a German-led plan for stricter budget rules — to a referendum. The treaty needs the approval of only 12 of the 17 euro zone countries to be ratified, but an Irish rejection would have undermined one of Europe’s key initiatives just as problems mount in Spain and Greece.

Analysts said the “Yes” vote would give Ireland a better chance of getting back to bond markets as planned next year and hand Europe a rare piece of good news.

“It is a message of support from Ireland to Europe, I think that’s very simply what it is,” said Dermot O’Leary, chief economist at Goodbody Stockbrokers.

“Policy-makers won’t have long to celebrate because there are wider issues in the euro area that they now must move their attention onto.”

In a sign of the modicum of stability that has returned to Ireland’s economy, data showed on Thursday that deposits held by Ireland’s domestic banks rose to a 14-month high in April.

That was in sharp contrast to Spain, where depositors worried about their banks moved money abroad at the fastest rate since records began, recalling the tens of billions of euros that flew out of Ireland ahead of its bailout.