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Fiscal Compact: Enda Kenny refuses to delay vote as future of Treaty in doubt

THE Government insisted last night that it would go ahead with the EU fiscal-treaty referendum at the end of next month, despite growing uncertainty across Europe over the stability pact.

French Socialist Francois Hollande, the favourite to become his country's next president following the second round of elections on May 6, is now threatening to overhaul the treaty.

And Finance Minister Michael Noonan has admitted that the "uncertainty and considerable risk" in Europe are making it increasingly difficult to predict what will happen with the economy.

"The ongoing elections across the EU and the continued pressure within the eurozone make it very difficult to forecast economic growth with certainty," said Mr Noonan.

He added: "Obviously, weakness of the euro is of concern, especially over the past two weeks. The Department of Finance will continue to monitor the economic situation over the coming weeks."

Asked last night if the Government was considering a postponement of the vote, Taoiseach Enda Kenny's spokesman replied: "Absolutely not."

But Mr Hollande has said that, if he is elected, France will not ratify the fiscal compact that has been pushed by Germany to tighten budget rules.

"There will be a renegotiation," Mr Hollande said in Paris, adding: "Either there will be a new treaty or there will be a modification of the existing treaty. It's about negotiation."

His comments put Mr Hollande on a collision course with German Chancellor Angela Merkel, who has championed debt reduction as the key to ending the fiscal crisis.

Mr Hollande, who has also pledged to eliminate France's budget deficit, is aiming to use popular support at home to strengthen his hand in talks to promote an alternative.

Resistance

But Ms Merkel and her ruling party are standing firm on the commitment to cut debt that was signed last month by all 17 eurozone leaders, among them Hollande's opponent President Nicolas Sarkozy.

Germany, the largest country contributor to eurozone bailouts, is facing growing resistance from traditional allies to its anti-crisis prescriptions as a €1 trillion firewall and unlimited European Central Bank loans to the region's lenders fail to stop the turmoil from threatening Spain and Italy.

Dutch Prime Minister Mark Rutte urged politicians yesterday to tackle the country's economic woes after his coalition collapsed over proposed budget cuts. A proposal on austerity measures will be sent to parliament today.

Ms Merkel insisted on the need for austerity yesterday, saying Europe's "credibility" depended on reducing deficits and debt.

"We're not saying that saving solves all problems," she told a conference in Berlin, adding: "Still, you can't spend more than you take in. You can't live your whole life this way. Everybody knows this."

Mr Hollande has said that he will seek to add growth and investment measures to the fiscal treaty signed by Ms Merkel, Mr Sarkozy and 23 other EU leaders on March 2.

If elected, his first visit will be to meet Ms Merkel, so he can bring her "the French people's vote for another Europe", Mr Hollande said last night.

Europe's front against austerity has expanded over the course of recent weeks after Spain struggled to meet EU-imposed deficit targets, election campaigns in Greece faced anti-austerity rumblings and the revolt against extra spending cuts in the Netherlands, a traditional German ally, pushed Rutte's coalition toward an early breakup.

However, Germany's Deputy Finance Minister Hartmut Koschyk said that despite all the turbulence "nothing has happened in recent weeks that would raise questions" about the need for eurozone countries to overhaul their economies and cut debt.

Irish Independent