Election brings uncertainty but not radicalisation – Ibec

McCoy says there remains strong support for Ireland’s pro-enterprise economic model

Political change: the Irish political centre has remained resilient and broadly pro-business, Ibec’s Danny McCoy will tell a Brussels forum. Photograph: Paul Faith

While the election has led to uncertainty it has not brought about the radicalisation of Irish politics that business leaders feared, according to Ibec’s Danny McCoy .

Mr McCoy will tell an event in Brussels on Thursday that Irish business still retains a "very positive outlook" on the economy despite the current political impasse. "Despite the pressure of crisis management over recent years, the Irish political centre has remained resilient and broadly pro-business," he says.

“In contrast to some other countries, there remains a strong national consensus in support of an open, pro-enterprise economic model.”

Mr McCoy is due to address an audience of senior European business leaders and policymakers at an event to mark Business Europe Day.

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He suggests the formation of a new government will be complicated for “historical party-political reasons” but the economy continues to perform “very strongly”.

“We are unlikely to see any fundamental shift in the economic approach over the coming years. This is very good news for those planning on creating new jobs and investing in the county,” he will say, noting Ibec’s economic forecast for 2016 remains unchanged at 4.3 per cent.

Election result

Markets largely ignored the inconclusive election result at the weekend, with Irish 10-year bond yields continuing to trade below 0.9 per cent, close to record lows. Nonetheless, he says any protracted period of political uncertainty is unwelcome from a business perspective.

“It is now important that all mainstream parties support the creation a stable environment for policymaking and key legislative initiatives, such as the budget,” he says. There are significant challenges, most notably the UK’s in/out referendum on Europe in June.

"It is a monumental decision with potentially profound implications for Europe and Ireland in particular. It is crucial that we have a stable political backdrop to ensure Ireland is in a strong position to effectivity manage every eventuality," Mr McCoy says. "The challenge for the next government, however it is constituted, is to ensure the economic progress of recent years continues. This will require major investment in infrastructure and a reform of the tax system," he adds.

Demographic pressures

Mr McCoy says years of underinvestment, combined with demographic pressures, mean Ireland will require greater flexibility in the application of EU investment rules over the coming years. One of

European Commission

president Jean-Claude Juncker’s flagship initiatives since taking office in 2014 has been a €315 billion investment plan to kick start Europe’s ailing economy.

The European Investment Bank has already approved 45 projects as part of the plan, including the modernisation of a steel plant in Italy.

Mr McCoy said Mr Juncker’s investment plan is a very positive development, but is only part of the solution: “This issue will need to be revisited at a European level. While we need to spend sensibly, we must invest ambitiously in transport, education and broadband to support growth and job creation.”

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times