Future of the euro again thrown into doubt after Irish announce referendum on new EU cash rules

By Jason Groves
29th February 2012

Efforts to prop up the euro were again thrown into doubt last night after Ireland announced plans for a referendum on whether to accept new European spending rules.

Taoiseach Enda Kenny announced the decision following legal advice that a referendum was likely to be needed under Ireland’s constitution. No date has been set for the poll.

Public anger over austerity measures is running high in Ireland and many observers were last night predicting a ‘No’ vote. That would not prevent the strict budget controls coming into force, but would leave Ireland unable to access future EU bailouts.

The move will dismay European leaders, who had been desperate to avoid a public vote in any of the 25 countries that have agreed to the contentious ‘fiscal compact’.

Despite the announcement, Mr Kenny is expected to join other European leaders in Brussels on Friday to sign the new treaty.

Downing Street declined to comment in detail last night, but said the referendum was ‘not a great surprise’.

The Prime Minister’s spokesman said: ‘We have always known that those countries in the Eurozone who would be bound by the new fiscal rules would be pooling economic sovereignty to some extent.

‘The possibility of a referendum in Ireland has been talked about so I don’t think it is a great surprise.’

Britain is not signing up to the new deal after David Cameron vetoed an agreement at EU level in December because of fears about its impact on the City. However, the Prime Minister later dropped his opposition to plans for the European Commission and European Court of Justice to police the new deal.

Tory MP Douglas Carswell last night said the Irish referendum showed the deal was going ahead despite Mr Cameron’s veto.

Mr Carswell said: ‘I am pleased that democracy is alive and well in at least one part of the EU. But it does raise questions for the Government, which first of all said the treaty did not represent a significant change and then said it had vetoed it.

‘The fact that EU leaders are going ahead and signing it on Friday is just further evidence of the contempt they have for their own people.’

Ireland has twice rejected plans for EU reform in referendums, only for the votes to be overturned under intense pressure from Brussels.

Eurosceptics in Ireland are expected to use the latest referendum to highlight Ireland’s dire economic problems, which have required a £70 billion bailout from the EU and International Monetary Fund.