Analysis: Familiar bedfellows must now face up to their severest test

Ireland’s recent general election was the most dramatic in the country’s history: Fianna Fáil lost almost three-quarters of its seats, the hard Left made significant gains and Gerry Adams will now sit in the Dáil as the head of the fourth-largest party in Irish politics.
But in an election of such surprises, the eventual result – a Fine Gael/Labour coalition – was hardly unexpected.

They are familiar bedfellows – they have formed coalitions six times. A Fine Gael/Labour government was widely predicted in the run-up to the election on 25 February, but the new administration is quite unlike previous coalitions between the two.

Both parties will enter government from positions of relative strength. In the past, they have often struggled to maintain the 83 seats necessary for a majority; in the 31st Dáil they will hold 113 seats.

No incoming government has ever faced such challenges, too. Unemployment stubbornly refuses to drop below 13 per cent, 1,000 people are emigrating every week and the country is struggling to keep up punitive repayments on November’s bail-out plan.

The agreed programme for government is, broadly speaking, a compromise between the two parties’ manifesto commitments. For example, job cuts in the public sector will be slightly less severe than Fine Gael proposed, but there will be no increase in the highest rate of income tax, a move favoured by Labour.

Aside from jobs, the big issue is still the toxic banking sector. The coalition has agreed to implement the austere ECB/IMF bail-out while simultaneously looking to renegotiate the 5.8 per cent interest rate on these loans. This rather contrary position seems designed to both assuage the bond markets and encourage European leaders to help Ireland out – though Taoiseach Enda Kenny will need to use the threat of an Irish default, a very real possibility, much more effectively if he is to succeed in agreeing with a more favourable deal.

Given the sins of the previous Fianna Fáil administration, the new government can expect an elongated honeymoon period in office. But if the economic situation has not improved in two years’ time, both Fine Gael and Labour could suffer.

This article first appeared in the Scotsman 7 March