What a difference a year makes! This time 12 months ago Fine Gael and Labour were gearing up for the biggest budget giveaway of their tenure in office – one that was meant to secure them a second term.
The only question was whether to call the election straight after announcing a series of tax cuts, including the phasing out of the universal social charge, or wait a little longer for Labour to recover more ground in the polls.
Fast forward a year and a fragile FG-led minority Government, beset by infighting and increasingly outflanked by a resurgent Fianna Fáil, hangs by a shoelace, while Labour, now banished to the political wilderness, looks on from the opposition benches.
Throw in the renewed spotlight on Ireland’s tax code courtesy of the EU’s ruling on Apple, the “leprechaun economics” tag now attached to our growth stats and the perennial issues of health and housing, and you’ve got a combustible mix.
Understandably the customary squabble over the size of the proposed budgetary adjustment which has marked the build-up to previous budgets has given way to speculation over whether the Government will survive.
Rival’s support
Fine Gael trails Fianna Fáil by nine point in the polls, a deficit not seen since the halcyon days of 2008 prior to the crash, and yet the party is relying on its rival’s support to get the budget across the line.
Dublin stockbroker Investec appeared to be sticking its neck out back in June by predicting we would be facing into another election by Christmas; now the forecast looks a distinct possibility.
“We have repeatedly outlined our view that a second election is likely to be held in 2016, with next month’s budget being the most obvious catalyst for such an event,” Investec analyst Philip O’Sullivan said in the broker’s latest economic outlook report.
He also noted that, given the lack of meaningful policy differences between the various centrist parties, another election was unlikely to result “in any real change”. Could Ireland be following Spain into a political quagmire?
