The treaty proposes that all members who ratify it should reduce their annual deficits to no more than 0.5 percent of gross domestic product. The current eurozone limit is 3 percent of GDP. Ireland is committed to cutting its way back to that level by 2015.
Opponents of the treaty argued that the new 0.5 percent deficit limit would force Ireland to keep cutting until perhaps 2020, when greater state investment to stimulate the economy was required. The government countered that much would depend on whether Ireland could keep growing its economy against the tide of austerity.
Ireland, unlike much of Europe, has recorded a faint pulse of growth over the past year thanks to strong exports by nearly 1,000 foreign high-tech companies based in Ireland. But the domestic economy — with consumers reducing their own debts and salting away savings after a decade of Celtic Tiger extravagance — has shrunk for four straight years.
Ireland has posted the EU’s worst deficits since 2009, including an EU-record 32.4 percent in 2010 and 13.1 percent last year. Both figures were greatly inflated by the exceptional costs of Ireland’s decision to nationalize five of its six banks rather than see any collapse. That debt burden overwhelmed Ireland’s national finances and pushed the nation into the bailout zone in 2010. Ireland’s expected repayments to international bondholders and central banks, plus decades of related interest charges, represent €19,000 ($23,500) for every man, woman and child.
• Associated Press writer Geir Moulson in Berlin contributed to this report.
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