Yesterday, in a referendum, the Irish people voted yes to the European fiscal stability treaty. There should be no misunderstanding: this result was a call for growth in the European economic zone, not austerity.
In supporting ratification of the European fiscal stability treaty, the Irish people have endorsed the government's strategy of restoring fiscal and economic stability as a platform for sustainable growth and job creation. In Ireland, as in the eurozone as a whole, stability is a necessary but not sufficient condition for growth. And growth, of course, is essential to any path out of the current economic crisis.
Ireland is now more than two thirds of the way through what is a necessary but painful fiscal consolidation process, and midway through a three-year financial assistance programme that has seen it meet all of the targets set by our funding partners in Europe and the International Monetary Fund.
The referendum result sends out a strong message about Ireland's commitment to Europe and to a stable common currency, the euro. But to move forward from here, we need a European growth strategy.
At the end of this month European leaders will sign off on initiatives which will bring new momentum to the search for growth. A number of important proposals are under consideration, including euro bonds, project bonds and strengthening the capital of the European Investment Bank. The time for hand-wringing is over. Bold decisions and fresh solutions are now required if we are to meet the demands of people across Europe for growth and jobs. We must use the European summit to reposition the eurozone and set it on a new course for growth.
We must also learn from the lessons of the Irish experience. Ireland's present difficulties are rooted in a blanket linkage of the sovereign debt to banking debt. Europe should not make the same mistake elsewhere.
Ireland favours giving the new European stability mechanism the power to directly recapitalise systematically important financial institutions. Allowing European facilities to take direct stakes in banks would break the sovereign-banking debt loop and could, as the IMF put it, make a world of difference. We are not disinterested in this matter. Irish government support to the banking sector has run to approximately 40% of the country's gross domestic product, and we have been clear that there is a need to find ways to alleviate this drag on our economy.
Last year, after one of the worst recessions ever experienced by an advanced economy, Ireland returned to growth. We have made progress in reducing our fiscal deficit; we are restructuring our banking system and competitiveness is being restored. Ireland's balance of payments is now in surplus. According to the Organisation for Economic Co-operation and Development, our economic recovery is projected to gain further momentum. But that growth is fragile and, as a small open economy, we are dependent on the right policy mix to sustain and enhance it.
The referendum result was a loud expression of confidence in the Irish economy, and another reminder that Ireland is dealing effectively with its problems. What we need now is what the rest of Europe needs: a stimulus to boost growth and create jobs. With the right policy mix, our potential is unlimited. The same, in the end, is true of Europe.
Eamon Gilmore TD is Ireland's deputy prime minister and minister for foreign affairs and trade.