Irish seen approving fiscal treaty by ‘safe’ 60-40 margin

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According to government sources, Ireland's referendum on the EU's new fiscal treaty is likely to pass by a margin of more than three to two, but with a turnout as low as 50%. Unlike the Lisbon Treaty ratification, this time the Irish vote matters little for the Union.

While the German-led plan for stricter budget rules (see background) needs the approval of only 12 of the 17 euro zone countries to be ratified, an Irish rejection would undermine one of Europe's key initiatives just as problems mount in Spain and Greece.

"It's safe to say it's a 'Yes' by more than a 60/40 margin," one of the sources said, citing polling data. Counting begins at 08:00 GMT, with the result due later in the day.

The referendum, Ireland's third on EU legislation in four years, put Dublin back in the spotlight after its implementation of an €85 billion EU/IMF bailout had left others, notably Greece, the focus of euro zone debt concerns.

Every opinion poll since the vote was called in February has indicated a comfortable ratification that would ease concerns about future Irish funding, though a turnout as low as 50%, according to national broadcaster RTE, had raised concerns among officials that apathy might favor a "No" vote.

'How committed is Ireland?'

Ireland has been held up by its European partners as the poster child for austerity and, in a sign of the modicum of stability that has returned to the economy, data showed on Thursday that deposits held by Ireland's domestic banks rose to a 14-month high in April.

In Spain, separate figures on Thursday showed that depositors alarmed by the dire state of their banks were moving money abroad at the fastest rate since records began, recalling the tens of billions of euros in deposits that flew out of Ireland ahead of its bailout.

The Irish debate has been squarely framed around a clause in the treaty stating that only those states that sign up can access future European bailout money. The Finance minister has warned that a "No" vote would be a "jump into the unknown".

Ireland, whose economy along with those of Greece and Portugal is being kept afloat with the help of an aid package, hopes to exit its program at the end of 2013 by re-entering bond markets.

However, the government has argued that access to Europe's new bailout fund, the European Stability Mechanism (ESM), is an essential backstop should the mood of uncertainty spreading across Europe scupper its planned market return.

While the "No" camp, spearheaded by the rising Sinn Fein party and some trade unions, argues that Europe would not dare cut Ireland off, business leaders have warned that a rejection would put inward investment at risk.

"If you're an investor and you're asking how committed is Ireland to staying as a full member of the European Union, a 'yes' vote is consistent with Europe membership," said Philip Lane, economics professor at Trinity College Dublin.

"A 'no' vote would send a weaker signal."

Eight counties have ratified so far

Denmark, an EU member that has opted out of the European common currency, ratified yesterday the fiscal compact treaty in parliament. The other countries having ratified so far are Greece, Portugal, Slovenia, Poland, Romania and Latvia.

Strangely enough, the core countries of the eurozone have not yet ratified the fiscal treaty. EU leaders have set 1 July as a target date for ratifying the treaty, which coincides with the entry into force of the European Stability Mechanism (ESM), the EU's permanent bailout fund.

Background

All but two EU countries signed a fiscal pact to tighten budget discipline on 2 March, marking a coup for Germany which sought the accord to prevent a repeat of the loose spending that contributed to the economic crisis.

Only Britain and the Czech Republic did not sign the new treaty, under which all other countries in the 27-nation bloc are to write a golden rule on balanced budgets into national constitutions or equivalent laws. They also agreed to automatic correction mechanisms if the rule is breached.

>> Read our LinksDossier: Europe's new treaty: Towards a multi-speed union

Timeline

  • 1 July 2012: Target date for ratification of fiscal compact in all 17 euro zone countries.

Further Reading

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