Tuesday 12 November 2019

Honohan backs ECB move but French mull over fiscal pact vote

Tom Shiel

CENTRAL Bank governor Patrick Honohan said yesterday that Ireland and the euro area will benefit from the latest measures by the European Central Bank to combat the eurozone debt crisis.

Prof Honohan said ECB President Mario Draghi's remarks following Thursday's meeting of the ECB governing council should not be underestimated.

Stock markets and the euro fell on Thursday because investors had hoped Mr Draghi would unveil concrete plans to support Spain and Italy. Still, Mr Draghi did suggest he wants to begin buying sovereign bonds soon and hinted that he will overrule Germany's Bundesbank which objects.

"I think it is good news," Mr Honohan told reporters in Mayo, at the official announcement that 40 jobs are to be created in Westport by the Lafferty Group in educational and publishing activities for the banking industry over the next three years.

When it was put to him that the markets had given the ECB measures a 'thumbs down', Mr Honohan replied that the announcement was quite "complex".

The markets had taken time to absorb it and there had been movements in different directions. "As the markets understand it a bit more, one would see movement in the direction one would have hoped for," Mr Honohan added.

While Mr Honohan praised Mr Draghi's announcements, resurgent divisions in France's ruling Socialist Party over the fiscal compact threatened ratification of the pact which was passed here in Ireland earlier this week.

French President Francois Hollande began a two-week holiday yesterday but it was still unclear whether adopting the budget responsibility pact would require a constitutional change -- something the president hopes to avoid.

Lawmakers on the left are calling for a fully fledged debate on European fiscal integration that threatens to revive old demons for Mr Hollande and accentuate a divide with Berlin just as EU leaders are battling to restore faith in the euro. Having in the past opposed the fiscal pact, Mr Hollande must now rally his party behind it just weeks after getting it sweetened with a package of growth measures.

Aides say he dreads opening a debate -- or even a potential referendum -- that will revive memories of his failed campaign for a 'Yes' vote in the 2005 national popular vote on a European constitution.

"This will be a moment of truth for the French and for the left," said Socialist lawmaker Christophe Caresche, a member of the National Assembly's European Affairs committee.

"Hollande learned his lesson in 2005. He wants to advance without creating irreparable fractures. He does not want to get sucked into having to lead a federalist European project."

Mr Hollande, who is holidaying on the 13th-Century Mediterranean island fort of Bregancon, still opposes enshrining a budget-balancing rule in the constitution and hopes a 'super-law' holding governments to meet budget targets would suffice.

He will return to work in mid-August just as France's constitutional council is due to rule on whether such a 'super-law' could hold sway over public finances, given the constitution stipulates budget autonomy for French regions.

Irish Independent

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