About the Treaty
- What is the Fiscal Compact Treaty?
- How will the Fiscal Compact Treaty operate?
- Is the Compact Treaty good for Ireland?
- Why is the Irish Exporters Association( IEA) supporting a YES vote?
What is the Fiscal Compact Treaty?
The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (or Fiscal Compact Treaty) was agreed by heads of State and Government of the seventeen members of the 'Eurozone' in January 2012. The purpose of the treaty is to provide stability to Eurozone economies, to restore confidence and to guard against future crises.
The Fiscal Compact Treaty is, very simply, about reinforcing existing EU rules to reduce Government deficits and debt and to get Eurozone Governments to agree to live within their means.
The Treaty will come into effect on January 1st 2013 for all countries who have formally ratified it.
What will the Fiscal Compact Treaty achieve?
The Fiscal Compact is about implementing and enforcing good housekeeping rules on members of the Eurozone. Many of these rules have been in place since the foundation of the Euro been not adequately enforced, leading to instability and uncertainty within the Eurozone.
The Fiscal Compact Treaty will limit Governments' structural budget deficits to not exceed half of one percent of Gross Domestic Product at market prices. This is a positive budgetary measure that would enable Ireland to both guard against future economic crises and better able to cope with future difficulties.
The Treaty also reinforces existing EU rules requiring countries to bring their national debt down to safe levels (60% of GDP). Levels in excess of 60% have been shown to be bad for both economic growth and employment.
There is an allowance for exceeding this in exceptional circumstances, such as those being currently experienced in Ireland. The Treaty provides recommendations for taking positive steps towards returning to this 60% level.
The Fiscal Compact also provides for access to the newly established European Stability Mechanism. This is a €500 billion fund to provide economic assistance to countries in economic difficulties who have ratified the Fiscal Compact Treaty and followed the guidelines. While Ireland currently has no need to access such funding it provides greater certainty to investors that such funding is available.
Is the Fiscal Compact Treaty good for Ireland?
Through the EU/IMF programme Ireland is already committed to reducing the General Government Deficit to 3% of GDP by 2015. By adopting the treaty the budget it will further demonstrate to investors Ireland's commitment to restoring fiscal stability.
The Treaty will impose common sense and good housekeeping measures on Governments to avoid future economic catastrophes. Ensuring that our Government operates in a fiscally responsible manner is clearly a long term benefit to Ireland.
Access to the €500 billion European Stability Mechanism will act as a good insurance policy for Ireland.
Why is the Irish Exporters Association supporting Fiscal Compact Treaty?
A Yes vote will help recovery in our main markets of the eurozone , where over 37% of our goods and services are bought .
A Yes Vote will ensure our EU buyers know we are taking the long term view , to ensure a stable financial system for them and us .
A Yes vote will give investors’ confidence that investment in Ireland is in a safe haven .
In essence a Yes vote provides Stability;
- Stability in terms of the nation's finance.
- Stability of Ireland's commitment as a member of the Eurozone
- Stability in terms of a defined path to recovery.
- Stability for global corporations who account for over 80% of our exports , when making strategic investment decisions.
- Stability for the services exporting companies who sell €27 billion p.a. into the eurozone markets .
- Stability for our manufacturing companies who sell €36 billion p.a. of goods into the eruozone markets
In conclusion a YES vote will help underpin the exports sales of € 67 billion of goods and services exports and protect over 200,000 Irish jobs .
Maintaining international confidence in Ireland's position at the heart of Europe and our market access to 500 million people, is at stake.