By Simon Miller

The Irish Prime Minister has announced a referendum on the European Stability Treaty.

Speaking to the Dail, Taoiseach Kenny said despite the decision to take the treaty to the Irish people, he believed it was "very much in Ireland's national interest that this treaty be approved, as doing so will build on the steady progress the country has made in the past year".

He continued: "That progress has seen international and investor confidence in Ireland rising, leading to many new investments in our country – investments that are creating new jobs for our people."

Kenny told the Irish Parliament that the ratification of the treaty would be another important step in the rebuilding of both Ireland's economy and its international reputation.

He added that it would give the Irish people the opportunity to "reaffirm Ireland’s commitment to membership of the Euro, which remains a fundamental pillar of our economic and jobs strategy".

"More binding and enforceable fiscal rules as a result of ratification will be good for both Ireland and the wider eurozone, and will cement growing international confidence in Ireland’s recovery," Kenny continued.

Although Ireland had agreed to the treaty, on the advice of the Irish Attourney General, it was considered that it was a unique instrument, outside the European Union treaty architecture and so needed a referendum to ratify it.

However, markets were spooked by the news with the euro falling against the dollar before recovering to around $1.3413.

Despite the apparent success of the austerity measures, the Irish government fears that the angered Irish voter will reject this treaty. Even before the austerity measures, voters rejected changes to the European treaty in 2001 and 2008, before reruns passed the proposals.

Kenny told the Dail that he was intending to sign the treaty on Friday with other leaders while the arrangements for the referendum will be finalised over the coming weeks.

He added: "I am very confident that, when the importance and merits of this treaty are communicated to the Irish people, they will endorse it emphatically by voting Yes to continued economic stability and recovery."

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