this Q&A explaining how the Irish referendum works.We’ve just launched
Polling data in the run-up to today’s vote suggested that the Yes camp will win. But there are no guarantees.
As the BBC explains:
The nightmare scenario for the government is that people wake up on Thursday morning and decide to give ministers a bloody nose by voting ‘no’ in the referendum.
After four years of austerity measures, some anti-treaty campaigners are predicting the “revenge of the people”.
Four opinion polls released over the weekend indicated that around 60% of voters would back the treaty. But a significant number of people have been classed as ‘don’t knows’ in the run-up to today’s vote.
The BBC also says that some ‘yes’ campaigners reckon the gap could be as close as 53-47. A sign of nerves, or an attempt to encourage Yes voters to the polls?
Last night, Irish prime minister Enda Kenny urged the Irish people to vote Yes in today’s referendum on the fiscal compact. He claimed that the country’s borrowing costs would leap to dangerous levels if it did not have the protection of the European Stability Mechanism.
Taoiseach Kenny said:
Countries that ratify this have access to the ESM, countries that don’t won’t and the difference between 3% and 7%, or even 8% or 9%, is enormous in the context of availability of funding, were that ever to be necessary.
Ireland’s 10-year bond are trading at a yield of 7.4% this morning. That’s a higher rate than a country can reasonably borrow at, but not so high that investors have given up on the country (whose borrowing needs are covered until the end of 2013 by its current bailout)
The No campaign, though, takes a very different view. It argues that rejecting the Treaty will give Ireland the authority to go back to the rest of Europe and demand a better bailout plan.
Sinn Féin president Gerry Adams argued that voting No wae the “patriotic thing to do”:
I ask Irish citizens not to be bullied, not to give their democratic rights away, not to give up their say over Irish economic policy and not to write austerity into the Constitution.
Irish voters face an unenviable choice today. The EU fiscal compact will force member states to hit tough budget targets, which would mean more short-term pain for a country that is already deep into its austerity programme.
But the fiscal compact will also guarantee access to the European Stability Mechanism, Europe’s new bailout fund – a financial lifeline to countries who cannot borrow in the debt markets.
Our leader article argues today that the pact is “an unroadworthy vehicle going the wrong way”:
It’s lethal not only for its occupants but other road users, it’s got an oil leak and probably no brakes. Would you hitch a ride in one, if it lurched to a halt in front of you?
But with no guarantee that Ireland can return to the financial markets as soon as planned, refusing a lift could be a gamble. Ultimately, it’s a choice between fear and anger:
Fear might well win the day in Ireland: no one knows whether a Greek exit would be a blip on the screens or another Lehman Brothers. But if the firewalls are not as thick as they are cracked up to be, would Ireland be the next point of contagion? The Germans need to get a signal, but would your economy be the one wanting to send it ? It’s hardly a great choice.
Here’s a quick agenda of some of the main events happening today:
• Irish referendum: all day, polls close at 10pm
• German unemployment data: 8.55am
• Eurozone inflation for May: 10am
• US Q1 GDP, second revision: 1.30pm
• Brussels Economic Forum: all day (including Olli Rehn and Mario Monti).
India, Switzerland, the Philippines and Denmark are all releasing (or have already released) GDP data, so we’ll keep an eye on the reaction to that data, for a more global economic perspective.
Ireland is the centre of attention today, as it holds its referendum on whether to ratify the fiscal compact. Polls have just opened across the country, and our Dublin correspondent Henry McDonald will be following all the action throughout the day. The results itself will be released on Friday.
Elsewhere, Spain is still a major concern. The crisis over its banking sector continues, there is still no clear plan for recapitalising Bankia, and its bond yields are still dangerousy high.
We’ll also be tracking the reaction to yesterday’s EU report cards on the European economy, which included a call for closer banking union, and warnings that France and Spain.
There’s also a lot of economic data being released today, including German unemployment, eurozone inflation, French and German retail figures, and another estimate of US GDP. Busy busy