Rise of Sinn Féin represents main threat to growth, says economist

Top Goldman Sachs expert: Biggest risk in our view provided by political events in State

The Irish economy has the capacity to continue to grow rapidly without overheating, according to the senior European economist with Goldman Sachs.

London-based Kevin Daly said political factors were now the main risk to Ireland's economic future, citing the increased popularity of Sinn Féin, with policies similar to those of Syriza in Greece and Podemos in Spain.

Mr Daly said the bank no longer viewed mortgage arrears as representing the largest domestic risk to the economy.

"The biggest risk now, in our view, is provided by political developments in Ireland. "

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Opinion polls showed support for Fine Gael, Fianna Fáil and Labour had fallen, while Sinn Féin might now be the most popular party in the country.

Austerity

Mr Daly said the party’s economic policies focused on the rejection of austerity, and were similar to those of Syriza and Podemos.

The likely make-up of the next government remained “highly uncertain”, and despite Taoiseach Enda Kenny having ruled out coalition with Fianna Fáil “it may be that this is the only combination of mainstream parties that could form a stable government”.

In his view an important explanation for “mainstream” parties losing popularity when the economy was doing so well was due to the fact that job and income levels remained weaker than before the crisis.

Colm Keena

Colm Keena

Colm Keena is an Irish Times journalist. He was previously legal-affairs correspondent and public-affairs correspondent