Ireland – Government Cannot Rest on Its Laurels
The economy is growing at a vigorous pace following a prolonged period of decline, but popular support for Prime Minister Enda Kenny’s Fine Gael and its coalition partner, the Labour Party, has not rebounded to a degree that creates a realistic possibility that the partnership might be sustained beyond the general election that must be held by April 2016. Although the job market is improving and the government was able to include tax cuts in its most recent budget, recent polls indicate that fully one-quarter of the electorate continues to express a preference for the Anti-Austerity Alliance and other small “protest” parties that emerged during the depths of the country’s economic crisis.
Kenny’s party could also face competition from Renua Ireland, a new center-right party formed by Lucinda Creighton, a former minister of state for European Affairs who was expelled from Fine Gael in 2013 after refusing to support a government-backed measure on pro-life grounds. Renua won 9.5% of the first-preference vote in its first electoral test, a May 2015 by-election for a seat that was retained by Fine Gael.
There are reports of disagreements within Fine Gael as to the timing of the next election, with some party stalwarts lobbying for a return to the polls shortly after the unveiling of the autumn budget, which is expected to include additional tax relief. Labour wants to delay an election as long as possible, hoping that its popular support will recover given sufficient time, and Kenny is also believed to favor a later election, no doubt wagering that the delay will maximize Fine Gael’s chances of repeating the electoral feat of the UK’s Conservative Party, which imposed harsh austerity on the British public, but managed to secure re-election with an outright majority in early May.
Regardless of when the election is held, tensions between the governing partners is set to rise in the near term, as Labour seeks to rebuild its support among the unions by pushing for the restoration of pre-crisis pay levels during upcoming wage negotiations. At the same time, Fine Gael’s prospects for widening its lead over Fianna Fail and Sinn Fein are dimmed by the persistence of discontent over the introduction of fees by the national water utility, which has not died down as Kenny and other government leaders had hoped. Moreover, Ireland’s fiscal strait-jacket has not yet been fully removed, as Ireland must complete two annual reviews with the so-called “troika” until 75% of the bailout loans are repaid, and European Commissioner Pierre Moscovici has warned that additional structural reforms will be required to ensure a solid foundation for long-term fiscal stability.
Moving beyond current opinions, a seasoned look into the most pressing issues affecting geopolitical risk today.EXPLORE INSIGHTS SUBSCRIBE TO INSIGHTS