Uncertainty prevails as Irish vote on fiscal treaty for eurozone

Ireland went to the polls yesterday in the only referendum being held on the new fiscal treaty in the European Union, which it hopes will alleviate the ongoing eurozone crisis.

The fiscal treaty, agreed by leaders of 25 of the 27 European Union member states in January, introduces tough fiscal rules across the union.

Under the terms of the treaty, budgets must be balanced or in surplus. Annual structural deficit must not exceed 0.5 per cent of gross domestic product. Government debt cannot exceed 60 per cent of GDP.

Opinion polls suggest that the “yes” vote will win when results are announced this afternoon. Turnout is expected to be low, reflecting in part uncertainty and fear among the Irish electorate about what the treaty, or rejection of it, will mean. The Irish economy is still struggling in the wake of the 2008 crash and the subsequent €85 billion (£68bn) International Monetary Fund/European Union bailout for its ailing banks.

Unemployment stands at around 15 per cent, with thousands emigrating every month. Forecasts for growth have been revised downwards, according to official government statistics.

On the streets yesterday, views were split about how important Europe will be in aiding recovery.

“I voted ‘yes’ because Europe are kind of the boss, and we need to stick with them. I don’t see any benefits of saying no,” said Claudia Sculley, 23, in Dublin.

For others, after four years of successive austerity budgets, the appetite for further cutbacks is fast diminishing.

“Austerity means just more cuts to people, that’s not going to work,” said Dan Dowling, 30, speaking outside a polling station in Tralee, County Kerry, where he voted “no”.

Ireland has rejected two European treaties in the recent past. The Nice treaty required two referendums, as did the Lisbon treaty, which was rejected in June 2008, before being accepted 18 months later.

Even if the treaty is passed, Sinn Fein looks set to be the big winner from the referendum. An Ipsos poll earlier this week put the republican party’s support at 24 per cent, making it easily the second most popular party in the state, behind the ruling Fine Gael.

Meanwhile, Labour, the junior party in Ireland’s coalition government, has seen its support halve to 10 per cent since last year’s election.

Few believe that ratifying the fiscal treaty will solve Ireland’s economic and, increasingly, social woes.

The government campaign raised the spectre that a “no” vote would see the country locked out of a new €700bn bailout fund – the European Stability Mechanism – for indebted eurozone countries.

Berni Ni Maolfhachtna, who voted “yes” in Tipperary yesterday, fears that rejection would leave Ireland effectively bankrupt if the country is unable to return to the international bond markets when it exits its existing bailout strategy at the end of 2013.

“I think ordinary folk in Ireland are just concerned that voting ‘no’ will mean a lack of available funding if we happen to need it in future, and that is not a reality anyone wants to face,” she said.

This article originally appeared in the Scotsman, June 1, 2012.