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Ireland's voters approve European fiscal treaty

By the CNN Wire Staff
updated 2:01 PM EDT, Fri June 1, 2012
Workers begin counting votes in the fiscal treaty referendum in Dublin, Ireland, on Friday.
Workers begin counting votes in the fiscal treaty referendum in Dublin, Ireland, on Friday.
STORY HIGHLIGHTS
  • Taoiseach Enda Kenny thanks the Irish people for a decisive and pragmatic vote
  • The European treaty passed with 60.3% voting in favor, a government official says
  • It aims to ensure fiscal discipline in Europe, as it struggles with debt and low growth
  • The pact must be ratified by 12 of the 17 eurozone members to come into force

(CNN) -- Ireland's voters convincingly approved a European treaty that aims to enforce stricter fiscal discipline, a government official said Friday, as Europe struggles to overcome a debt crisis.

Voters backed the treaty with 60.3% in favor and 39.7% against in a nationwide referendum held Thursday.

In a televised address, Enda Kenny, the Irish taoiseach, or prime minister, thanked Ireland's people for their "decisiveness and pragmatism" in approving the fiscal pact.

It was not an easy decision to make, he said, but the vote in favor carried a clear message.

The "Irish people have sent a powerful signal around the world that this is a country that is serious about overcoming its economic challenges," he said

Ireland votes on EU treaty
Ireland's financial woes

Kenny added, "I acknowledge the sacrifices that the Irish people are making to contribute to the process of economic recovery. Some of the measures we have had to take have been painful for many people."

He said that on Friday, he had spoken to European leaders including German Chancellor Angela Merkel, Spain's Mariano Rajoy and French President Francois Hollande.

Herman Van Rompuy, president of the European Council, welcomed the result of the referendum.

"With this vote, the Irish people have given their endorsement and commitment to European integration. This result is an important step towards recovery and stability," he said.

Turnout in the referendum was low, around 50%, partly because of poor weather during voting Thursday. The treaty had been widely expected to pass.

The leaders of all but two members of the European Union signed the pact in March, but it has yet to be officially endorsed by 12 members of the euro currency union, which is necessary for it to become binding.

Meanwhile, the 17-nation eurozone's unemployment rate has reached the highest level since the creation of the common currency 13 years ago, according to official figures released Friday, climbing to 11% in April as employers slashed 110,000 jobs.

Ireland's unemployment rate remained stable compared with a year ago, at 14.2%, according to the report from the European Union's Eurostat statistical bureau.

Lucinda Creighton, Ireland's Europe minister, told CNN that she is confident the country's voters realize the importance of the treaty.

"It's very much about the fact that Ireland needs to see our currency stabilized, and the fiscal compact -- well, it's not a solution in itself, it's a hugely important element of a solution, and I think the Irish people see that very clearly," she said.

"If we want Ireland's economy to recover, which we clearly do, well we need the euro to recover, so the two are absolutely interlinked."

Speaking as the Irish voters went to the ballot box, Creighton said she expected that many people would vote "enthusiastically" in favor of the treaty but that a "substantial" number would vote against it.

"I think we have to address some of the concerns that exist in relation to the currency, in relation to the European Union more generally, in relation to the whole European project," she said. "We have a big challenge on our hands -- I don't underestimate that for one second."

Ahead of the vote, supporters said approving the treaty would help ensure financial stability in Ireland, warning that a rejection could lead to a renewed banking crisis and potentially force the nation out of the euro currency union.

Opponents argued that backing the agreement would result in additional cuts to public spending and cause economic hardship for Irish citizens who have already been living with austerity for years.

The fiscal compact, first announced in December, is designed to impose discipline in government finances. It includes a "balanced budget rule" that requires governments to keep deficits below 0.5% of gross domestic product, among other things.

Excluding costs associated with the bailout of Irish banks, Ireland's 2011 budget deficit was estimated at 9.4% of GDP, according to the International Monetary Fund.

Still, Ireland is widely seen as the "good student" among the eurozone nations that have fallen victim to the debt crisis. The IMF has approved Ireland's austerity measures during each quarterly assessment in 2011, allowing Dublin to receive installments from the €85 billion four-year bailout program agreed to in December 2010.

Before the results of the referendum were in, David Owen, managing director and chief European financial economist for Jefferies International, said Friday that a "no" vote from Ireland would be "bad news" for the wider eurozone, where some countries are already struggling with recession. The eurozone encompasses the 17 nations in which the euro is the official currency.

Ireland's referendum comes at a time of widespread fears over the future of the eurozone, with Greece at risk of defaulting on its huge debt and growing concerns about Madrid's ability to contain its economic and financial crises.

CNN's Laura Smith-Spark and Irene Chapple, and journalist Peter Taggart contributed to this report.

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