Deal on promissory notes is massive boost for down-at-the-polls Coalition
While most ordinary voters may not understand the complexity of the deal they will be able to do the crucial maths involved. The fact that Ireland has to borrow €20 billion less over the next 10 years is a very good thing.
Lower interest rates for overall Government borrowing is also an obvious positive.
Voters also understand that while the repayment on capital in 35 years may be larger – at least in today’s money terms – it will be more manageable. Crippling private debt and very high levels of long-term unemployment still leave Ireland in an economic malaise, but this deal, coming as it does when the euro crisis appears to be easing, gives further hope for recovery.
All of this plays well for the Government in the contest about economic management capacity within which the next general election will be framed.
Before this week’s developments there was much reason for the Government to be wary of the Ides and end of March. Had they not pulled off a deal before the next instalment of €3.1 billion was due on the promissory notes on March 31st or had they managed only some fudge of a deal, the Government would have paid a very high price.
This would have been the case not least because Enda Kenny and his Ministers had publicly staked so much on it. Having staked so much, the political gains are greater.
One complication in political terms arises from the fact that of necessity this achievement is heavily branded Fine Gael. It is fronted in the Dáil and media by a Fine Gael Taoiseach and Fine Gael Minister for Finance.
Eamon Gilmore and the Department of Foreign Affairs are also of course on the stage, and will be more centre stage in any deal with the European Union, while Brendan Howlin has a cameo role.
The challenge for Gilmore and Labour between now and the next election, however, will be to ensure that they are not the ones taking all the blame for cuts while Fine Gael gets all the credit for strong macroeconomic management.
Having done the deal and done it a full seven weeks before the promissory note payment was due, the Government can now focus on negotiations with the European Union on the remainder of the bank debt, and with the trade unions on a successor to the Croke Park deal.
The Government still faces many difficult economic challenges, but it goes into the next round of the political championships with the wind at its back.