VI - Euro Plus Pact

On March 11, 2011 the Heads of State or Government of the Eurozone endorsed the Pact for the Euro. At the 24/25 March 2011 European Council, the same Heads of State or Government agreed on the Euro Plus Pact and were joined – hence the ‘Plus’ – by six others: Bulgaria, Denmark, Latvia, Lithuania, Poland, Romania (leaving only the UK, Czech Republic, Sweden and Hungary out).      
The objective of the pact is to foster competitiveness, foster employment, contribute to the sustainability of public finances and reinforce financial stability. In the Euro-Plus-Pact the Heads of State or Government have entered into commitments on a number of policy areas, in which member states are competent. 

What political/legal difficulties
did Ireland encounter in the negotiation of the Euro-Plus-Pact, in particular in relation to the implications of the Pact for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process.

There were no publically known significant political or legal difficulties encountered in the negotiation of the Euro Plus Pact.

The government was broadly supportive of the measures with the Taoiseach (Prime Minster) stating prior to the European Council Summit of 24 March 2011 that ‘[c]learly, Ireland will support measures that can contribute to a restoration of confidence in the markets, foster economic growth and job creation and help Europe move beyond the economic crisis.’[1] The summit was the first attended by the Taoiseach after the general election of March 2011. A general concern was to restore Ireland’s reputation amongst European colleagues and to secure a renegotiation of the financial programme including a reduction on interest rates.

A number of contributors to the Dáil debates focused on the issue of Ireland’s corporation tax rate and the need to resist any attempt by European actors to force a change on this issue. Media reports in preceding weeks had focused on comments made by Nicolas Sarkozy and Angela Merkel to the effect that a change in Ireland’s corporation tax rate may be a condition for any renegotiation of the deal. Cross-party support existed for maintaining a low rate with the leader of the opposition stating that ‘Ireland’s Government has changed but its negotiating position has not for the simple reason that it cannot. A deal on the support programme is worthless if to win it we would have to undermine a major proportion of economic activity in the country.’[2]

Only one deputy from the opposition Sinn Féin party raised possible implications for Ireland’s sovereignty resulting from the Euro Plus Pact. Pádraig MacLochlain, while noting that ‘there are no provisions for compulsion or sanctions’ maintained that ‘the pact for the euro will be converted into a binding agreement for euro area countries, representing a deep European penetration into national political and policy freedoms without any genuine democratic mandate.’[3]

What other information is relevant with regard to Ireland and the Euro-Plus-Pact?

National measures are broken down into the four areas covered by the Euro-Plus-Pact; fostering competitiveness; fostering employment; maintaining sustainability of public finances and reinforcing financial stability.[4]

1.      Fostering Competitiveness.

·         Changes have been introduced in the procedure to create employment wage agreements through the Industrial Relations (Amendment) 2012.

·         State assets are to be sold and some of the proceeds invested into the economy.

·         Legislation has been enacted or proposed to introduce greater competiveness into the legal sector (Legal Services Regulation Bill 2011 – not yet enacted, in committee stage) medical services (Health (Provision of General Practitioner Services) Act 2012 – enacted) and pharmaceutical services (regulations on profit levels).

2.      Fostering Employment

·         Employer paid social insurance is to be reduced for lower income jobs for the first 18 months following the commencement of employment.

·          20,900 work placement, training and education positions have been made available.

·         A ‘Micro-Finance Fund’ of €100 million to lend to small and medium enterprises.

3.      Maintaining sustainability of public finances

·         A Comprehensive Expenditure Report 2012-2014 was completed and published on 5 December 2011.

·         A Fiscal Advisory Council was established and later given a legislative basis in the Fiscal Responsibility Act 2012.

·         The pension age was increased from 65 to 68 years of age, to be implemented in three steps between 2014 and 2028.

·         Undertakings were made to broaden the tax base including introducing a property tax. The introduction of a property tax has since become a focus of political debate.

4.      Reinforcing financial stability

·         Measures have been proposed to enhance the supervisory framework of banks in Ireland in the Central Bank (Supervision and Enforcement) Act 2013.

·         There has been a downsizing and radical restricting of the Irish banking sector focusing on two core ‘pillar’ banks namely Allied Irish Banks and Bank of Ireland.

Capital injections into the Irish banking sector totalling €73 billion have taken place since the beginning of the crisis.

[1]               An Taoiseach Enda Kenny Dáil Debates, 22 March 2011, Vol 728 No 3, 190.

[2]               Micheál Martin TD ibid, 192.

[3]               Pádraig MacLochlain ibid, 194.

[4]               Euro Plus Pact Commitments made by Ireland in May 2011: Update as of April 2012. Available at No more up to date documents are available. Efforts have been made to determine the current status of proposed legislation.