Ireland holds referendum on EU fiscal compact

Ireland is voting on whether to ratify the EU’s fiscal compact that sets strict limits on budget deficits for member nations. If rejected, the debt-beleaguered country will be denied further bailout money after its current tranche runs out in 2013.

Ireland is the only country in the EU holding a referendum on the pact. But since only 12 of 17 eurozone members need to ratify it, an Irish rejection won’t sink the entire agreement. It has already been accepted by all EU members except Britain and the Czech Republic.

Those against the treaty in Ireland argue that austerity is dragging Europe into economic recession, and that the country should instead default on its debt. Last year, Irelands ran a 13.1 per cent deficit. The treaty commits countries to holding their deficits to under 0.5 per cent of total economic output.

Prime Minister Enda Kenny urged Irish voters to support the pact in a televised address. “I ask you to make a further contribution by coming out to vote ‘Yes’ on Thursday. Yes to stability. Yes to investment. Yes to recovery. Yes to a working Ireland,” he said, quoted by the BBC.

As voters took the polls in Ireland, concern over the eurozone continued to affect markets around the world. In Canada, the loonie took a 0.60 cent dive on Wednesday to close at 97.16 cents US. The euro dropped below $1.24 US for the first time since 2010.

For investors, one of the biggest concerns in the eurozone is Spain, a country with soaring borrowing costs and a troubled banking sector. “They have to do something to put a ring around their banks,” Chris Kuflik, investment adviser at ScotiaMcLeod in Montreal, told the CBC. “There has to be some form of a resolution and the difficulty is, you have so many different agendas from so many different nations.”