Irish voters back fiscal treaty in referendum
FRANKFURT (MarketWatch) -- Policy makers from Brussels to Berlin, not to mention Dublin, likely breathed a big sigh of relief Friday as tallies indicated voters in Ireland backed a new European Union treaty aimed at forcing national governments to respect the region's budget rules.
With all constituencies reporting, the final tally saw the "yes" vote at 60.3% as opposed to 39.7% voting "no" in the referendum, according to the official tally.
Turnout was low by Irish standards at 50.6%. Voters went to the polls on Thursday.
"The Irish people have sent a powerful message around the world that this is a country that is serious about overcoming its economic challenges," Prime Minister Enda Kenny said at a news conference, according to Reuters.
Brussels applauded the outcome.
"With this vote, the Irish people have given their endorsement and commitment to European integration," said European Council President Herman Van Rompuy in a statement. "This result is an important step toward recovery and stability."
The Irish government had campaigned hard in favor of the referendum. Failure would have left Ireland, which received a bailout of 85 billion euros ($104.7 billion) in 2010, unable to further tap the European Stability Mechanism, the euro zone's rescue fund.
"Clearly, a 'yes' vote will be key in bolstering confidence in the Irish government's funding position," said Conall Mac Coille, economist at Davy in Dublin.
Ireland's ISEQ General Index (IEGI) fell 2% as European and U.S. equities tumbled in the wake of rising worries about the global economic outlook. The yield on 10-year Irish government bonds (10YR_IRE) rose 0.06 of a percentage point to stand at 7.45%, according to electronic trading platform Tradeweb.
Economists said that a "no" vote could have triggered further contagion.
"On the European level, this is good news as it keeps the aim for long-term debt consolidation in place. That said, European leaders now face the thorny task to try to reconcile fiscal orthodoxy with a growth strategy," said Manuel Maleki, economist at ING Bank.
But with investors focused on Spain's faltering attempts to shore up its troubled banks as well as potential ramifications of a exit by Greece from the euro zone, the scope for relief's limited.
"A 'yes' is well priced in," wrote strategists at UBS.