The Irish have held three referendum’s on Europe in four years. They said ‘no’ to the Nice Treaty but ‘yes’ to the Lisbon Treaty. This time the finance minister warned against jumping into the unknown with a ‘no’.
The government can now return its attention to a long effort to refinance 30 billion euros of bank debt. Ireland has so far faithfully implemented the terms of an 85-billion euro EU/IMF bailout.
Dublin’s head-banger this year is to spend 4.2 billion euros less. It is hoping the ‘yes’ vote will improve Ireland’s chance of getting back to bond markets. The life-saver it was thrown in 2010 when its banks collapsed expires in 2013.
Data this week did show that deposits held by domestic banks rose to an encouraging 14-month high in April. But it will need to get a lot rosier; lenders are still betting the country might have to ask for another bailout.
Analyst Megane Greene at Roubini Global Economics said it is far from in the clear: “Ireland needs to think about it’s position within Europe, especially as countries are going to be pulling out of the euro zone. And Ireland’s entire growth model is reliant on multinational companies setting up their European headquarters in Dublin.”
Dublin’s plans for an export-led recovery are in question due to a slowdown in its closest trading partners. The European Commission predicts economic growth slowing this year from 0.7 percent in 2011.
Brussels cautions that major challenges lie ahead.
National debt related to income is 116 percent. This year the deficit is projected as 8.3 percent, and growth just 0.5 percent. Unemployment looks like staying at above 14 percent. The people who voted ‘no’ in the referendum say all that proves that austerity is not going to get them out of this.
Shopkeeper Tony Morgan said: “People are unhappy with austerity, they’re unhappy with cutbacks. [There is] just total disenchantment, disbelief with the whole system – with what has happened over the past three or four years.”
Social Protection Minister Joan Burton acknowledged that many Irish “voted ‘yes’ with a heavy heart, and many voted ‘no’ with a heavy heart.
The government had warned them that rejecting the new strict rules would bring worse austerity and cut off EU backup funding.