Wednesday, 6 June 2012

Ireland votes yes

In the recent vote on the fiscal pact Ireland voted a resounding yes with over 950,000 votes as opposed to the no vote polling 650,000. In an unusual move to hold a referendum middle class voters ticked yes, whereas in the main working class voters ticked no.   Fears of Ireland voting no overall though, were not realised and Europe especially Angela Merkel can breathe a small sigh of relief.  The Irish public it seems have decided not to take the risk of voting no and stay in the heart of the Eurozone but some important issues remain.  Ireland in some ways has been seen as a success story for the EU.  Growth has improved whilst the deficit and borrowing costs has reduced in the face of harsh austerity measures.  These measures as a result of the yes vote are only set to continue.  This will allow them to access money from the European Stability Mechanism, which will allow Ireland to continue servicing its debt.  However levels of borrowing will be high as well as unemployment.  The political and economic situations in Spain and Greece could have knock on effects for Ireland, if they develop in an unfavourable way.  Ireland wants to overcome its economic challenges; however the austerity alone is not the sole answer.  Prof Marcus Miller and Lord Skidelsky in the financial times recently stated that:

 “George Osborne is in fact conducting a high-risk, live policy experiment with the British economy.  The lack of growth and the evidence of double-dip recession suggest that the experiment has indeed failed. The chancellor should either change his policy or stand aside”

The Prime Minister stated that the fiscal pact would not solve all of Ireland’s problems.  It’s hard to see jobs and growth materialising in big numbers.   In the months to come, the Irish public will be watching the economy closely to see whether austerity can bring growth.

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