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Saturday 22 July 2017

We're not trying to dodge EU referendum -- Gilmore

Head of the Institute of International Finance (IIF)
Charles Dallara and his colleague Jean Lemierre leave the
Greek prime minister's office after a meeting in Athens.
The IIF represents Greece's private bondholders.
Head of the Institute of International Finance (IIF) Charles Dallara and his colleague Jean Lemierre leave the Greek prime minister's office after a meeting in Athens. The IIF represents Greece's private bondholders.

Brendan Keenan and Fionnan Sheahan

But Government tried to block need to have 'golden rule' put into Constitution under fiscal treaty

THE Government has tried to block the need to have a debt brake or golden rule inserted into the Constitution under the proposed EU fiscal treaty, Tanaiste Eamon Gilmore admitted yesterday.

But he denied the Government was trying to dodge the need for a referendum on the new treaty.

"We are not, as some have cynically suggested, negotiating to avoid a referendum. Such an approach would be seriously wrong-headed. If we are advised that we must put it to the people in order to ratify, then that is what we will do," he told a meeting of the Joint Oireachtas Committee on European Union Affairs.

The latest draft of the fiscal compact suggests countries must have binding rules on balanced budgets -- "preferably" of a constitutional nature.

But, like earlier drafts, it allows for a non-constitutional rule, provided it has sufficient force. The earlier draft did not include the word "preferably".

The treaty would give the European Court of Justice the power to fine countries whose balanced-budget laws are not sufficiently strong.

Mr Gilmore's comments came after Finance Minister Michael Noonan admitted the Government wanted to avoid a referendum.

Deficit

The draft, to be discussed on January 23 by EU finance ministers, will require a centralised "correction mechanism" to be triggered "automatically" in cases of "significant" deviations from a target structural deficit of 0.5pc of gross domestic product (GDP), according to the document seen by Bloomberg News.

Sinn Fein TD Padraig Mac Lochlainn said the requirement of a 0.5pc deficit, rather than the existing 3pc limit, would mean austerity budgets for the whole life of the present Dail. In fact, the EU rules will require such budgets until debt has fallen to 60pc of GDP, which could take decades to achieve.

The latest draft is a return to German Chancellor Angela Merkel's drive to put stiffer rules on deficit control at the heart of efforts to combat the debt crisis.

It also does more to heed ECB President Mario Draghi's warning that governments must follow through on their "breakthrough" commitment to restore credibility to public finances in the 17-nation euro area.

The new treaty says the EU court could impose a lump sum penalty of up to 0.1pc of a country's GDP (€160m in Ireland's case) to be paid into the euro area's permanent rescue fund by countries whose budget-balancing provisions are questioned.

The document says the treaty will enter into force after 12 members of the 17-country eurozone have ratified it. It also says necessary steps to implement the treaty changes shall be taken "within five years at most" after the treaty takes effect. (Additional reporting by Bloomberg)

Irish Independent

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