Thursday 14 December 2017

Au revoir austerity says Europe as Enda Kenny confirms referendum on May 31

France's newly-elected President Francois Hollande waves from a balcony at his campaign headquarters in Paris May 7. Photo: Reuters
German leader Angela Merkel sent a clear message to new French leader Francois Hollande that the fiscal compact treaty can't be changed

Ed Carty and Henry Samuel

THE May 31 fiscal treaty referendum will go ahead as planned, as Taoiseach Enda Kenny said he welcomes calls from the new French president for growth policies.

Mr Kenny said the Government and other European states have been pressing for the initiative backed by Socialist leader Francois Hollande after his victory at the weekend.

"We will go ahead with the referendum as planned," the Taoiseach said.

"I welcome the fact that president-elect Hollande has been talking about growth and investment which is what Ireland has been talking about along with a number of other leaders for the last number of months.

"Clearly we support that principle very strongly as an addition ... as a complement to the existing treaty.

Mr Hollande has said he wants a number of growth measures to be added to the fiscal treaty although German Chancellor Angela Merkel has insisted there is no room for renegotiation.

"The Irish people will decide further for ourselves on May 31 and I hope that's a resounding yes," he added.

Tanaiste and Labour leader Eamon Gilmore has also dismissed calls for the referendum to be deferred after travelling to Paris to join the Socialist celebrations.

The only option for changing the fiscal treaty is to secure agreement from the leaders of all 25 countries who have signed the pact, to make amendments, rewrite a section or include new protocols.

Only 12 of the 17 eurozone countries need to ratify the treaty in order for it to come into effect.

Anti-austerity movements are gathering pace across Europe following political earthquakes in France and Greece, with 12 governments dismissed over the last three years.

With unemployment in Europe at its highest level since the creation of the single currency, resentment has been growing over whether strict budgetary discipline is the best way to brace a spiral of debt.

Street protests have been seen across Italy, Spain and Portugal as people reacted to spending cuts that have slowed economies across Europe.

Savings have been wiped out and in Spain, a real estate crash has helped swell unemployment to 25pc of the workforce.

Many economists have advocated a greater emphasis on growth, but it has only gained traction among European policy-makers and politicians in the past few weeks.

Paul Krugman, an economics Nobel Prize winner, welcomed the anti-austerity groundswell in Europe, saying the bloc’s voters proved “wiser than the Continent’s best and brightest”.

He said the health of the German economy was “an argument for much more expansionary policies elsewhere, and in particular for the European Central Bank to drop its obsession with inflation and focus on growth”.

Anti-austerity momentum came to a head on Sunday night, when voters in France and Greece spectacularly ousted governments seen as towing the fiscal discipline line too strictly.

In France, new Socialist president-elect Francois Hollande said his victory marked “a new departure for Europe and hope for the world” because it showed “austerity can no longer be the only option”.

Meanwhile in Greece, where over 60pc of voters support anti-austerity parties, parties who reject the extreme belt-tightening that comes with international bail-outs were the big winners in parliamentary elections on Sunday.

Hannes Swoboda, leader of European Socialists and Democrats, said yesterday: “This radical austerity policy has pushed Europe into recession and brought about the explosion in unemployment. It has led to the votes for extremists in Greece and the upsurge in the National Front in France.” “The process of stabilisation must be based on a growth pact to stimulate investment and job creation”.

Even in Germany, the state of Schleswig-Holstein ousted a centre-Right government made up of the same parties as Chancellor Angela Merkel’s federal coalition, which preaches austerity.

Gaining ground on Ms Merkel’s Christian Democrats, the Social Democratic Party yesterday joined the Hollande growth bandwagon, with its president, Sigmar Gabriel, saying the Frenchman’s victory “shows there is another solution than a politics uniquely based on austerity in Europe”.

In Italy, which is holding local elections, the centre-left PD, one of two parties which the Prime Minister Mario Monti depends upon for his majority, urged him to delay parliamentary approval of the EU fiscal compact and slow the process towards deficit reduction.

An anti-austerity movement is also gaining ground in Ireland, which on Monday said it would not defer a referendum on the EU fiscal pact.

Eamon Gilmore, the deputy prime minister, said Mr Hollande’s victory showed there was a new emphasis on growth in Europe, but warned that postponing the May 31 plebiscite would put off investors.

Paul Murphy, MEP for the Socialist Party and United Left Alliance, urged Ireland to block the treaty. “With a No vote, people in Ireland can add to the momentum against this attempt to write austerity into law,” he said.

Telegraph.co.uk

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