S&P sees ‘business-friendly’ Irish economy if Sinn Féin in government

Standard & Poor’s (S&P) main analyst on Ireland’s creditworthiness said the State’s “business friendly” economic model and “strong institutions” should remain intact through any government changes, when asked on Thursday if he saw a Sinn Féin-led government posing a negative risk to the country’s credit rating.

S&P’s “base case assumption” is that the Republic’s openness to trade, flexible labour market and commitment to put its high public debt levels “on a downward trajectory” will remain in place “regardless of the election outcome in 2025, or if anything happens before”, said S&P sovereign ratings analyst Rémy Carasse on a webinar hosted by the firm.

He said that this has been S&P's view ever since Sinn Féin secured the most first-preference votes, and the second-largest number of Dáil seats, in the February 2020 general election. S&P has an AA- rating on Ireland, three rungs below its top-notch AAA grade, but four levels above where it stood at the height of the financial crisis.

“So, now, if the current coalition Government falls at some point, it would add uncertainty at some point, which could be perceived as negative factor – but it wouldn’t necessarily mean that it would lead to a negative rating action,” Mr Carasse said. “The strength of the institutions in Ireland and also the recent [positive] trend in the economy . . . gives some leeway.”

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‘Direct relation’

Mr Carasse added: “The main point is that we shouldn’t see a direct relation between an election outcome and the rating in Ireland, but we’ll obviously monitor this closely and try to anticipate the consequences as the best we can.”

Members of the Government have argued – against the backdrop of strong recent polling figures for Sinn Féin – that a future government led by the republican party would damage the State’s economy. Taoiseach Micheál Martin claimed earlier this month that Sinn Féin’s “left-wing populism” agenda would “cripple the enterprise base” and level of employment in the State.

An Irish Times/Ipsos MRBI poll published in early December suggested that support for Sinn Féin stood at 35 per cent, compared with 20 per cent each for Fianna Fáil and Fine Gael.

Meanwhile, Mr Carasse noted that the Irish economy is on track to remain strong in 2022, following an estimated “remarkable” gross domestic product growth rate of about 15 per cent last year, driven by the activities of pharmaceutical and IT multinationals based in the State.