IRELAND WILL HOLD REFERENDUM ON EU FISCAL COMPACT

Ireland flags

Photo: AP Images

Bloomberg and thejournal.ie are reporting that Ireland will have a referendum to ratify the European fiscal compact, according to Irish Prime Minister Enda Kenny.That’s the newest hurdle ahead for EU crisis security.

European leaders agreed to a fiscal compact that would impose automatic sanctions on states that exceed deficit targets back in December. The compact would stipulate that countries maintain deficits of less than 0.5 per cent of GDP and cut their public debt-to-GDP ratios down to 60%.

At the time, many analysts expected that there would indeed be legal challenges to the compact, enshrined in a new EU treaty, because it might impinge upon the sovereignty of countries to control their budgets.

It remains unclear when the referendum will be held.

According to the Christian Science Monitor, a “no” vote on the referendum would exclude the country from funding made available by the European Stability Mechanism—Europe’s permanent bailout fund that is set to go into effect in July of this year. On the other hand, Bloomberg indicates that only 12 countries need to approve the treaty for it to go into effect.

In statements made after the announcement, Kenny said that he’s confident the new EU fiscal compact will get a “yes” vote. Ireland has twice voted down past EU treaties before later approving them after being provided with concessions.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.