Where will they be this time next year?

Rising unemployment followed falling growth rates in 2001 and suddenly the Coalition's plans to go to the country next year as…

Rising unemployment followed falling growth rates in 2001 and suddenly the Coalition's plans to go to the country next year as the good-time Government of the boom were up in smoke.

Now, instead of coasting to a sunny Summer election with World Cup fever boosting the national mood of prosperity, Fianna Fail and Progressive Democrats must overcome major political obstacles in the New Year if they are to be the first Government returned to office since 1969.

Ongoing dissatisfaction with the health services, abortion and continued economic uncertainty will make the run in to the election - seen as most likely to take place in May - a difficult one for the Government.

The renewed sense of optimism on the Opposition benches is due to a confluence of events rather than any great rejuvenation in Fine Gael and Labour. Fine Gael changed its leader but not its fortunes early in the year, narrowly ousting John Bruton in favour of Michael Noonan. Noonan, however, has not so far transformed the party's standing, and opinion polls still show the party failing to capture public imagination.

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Labour also showed no signs of take-off in the polls and for much of the year neither Opposition party appeared capable of using the Dail or other forums of public debate effectively to score points off the Government. The two main Opposition parties did agree various forms of co-operation towards the end of the year to make them appear more cohesive. But Labour continued to carry on in public with its internal debate over how great its public hostility to Fianna Fail should be.

Despite the lacklustre Opposition, the Government is feeling the electoral heat. An extraordinary vote management exercise in 1997 gave Fianna Fail 77 of the 166 Dail seats with 39.3 per cent of the vote. The same percentage of the vote could see them return with several fewer seats this time. Already two short of an overall majority and kept in office by independents, the Coalition cannot afford to lose even three seats if they are to retain power. On the other hand a gain of a half dozen seats would be enough to allow an alternative Fine Gael/Labour/Green Party combination be formed.

The Minister for Finance has done his best to minimise the effects of the downturn - before the election at any rate - through his creative boosting of Exchequer funds. The grabbing of money from the Central Bank, the Social Insurance Fund and the bringing forward of Corporation Tax payments will be used to fund welfare payment rises, modest tax cuts and extra spending on politically sensitive projects including health. The £2 billion windfall achieved by the Minister's manoeuvres will ensure the Government doesn't have to face the people having begun the psychologically damaging process of borrowing once again.

In relation to the health services, however, the Government is running out of time to impress. It was late 2001 before its long-awaited health strategy document was published, promising to transform the health services - but not yet. Immediate short term measures were included to try to reduce hospital waiting lists and provide more hospital beds to alleviate the shortage in the public system. Funding for these improvements was agreed after tortuous negotiations between the Ministers for Finance and Health. But the longer term transformation promised by the strategy will not be seen until well into the next Government's term - and that's only if the next Government doesn't tear up this plan and begin work on one of its own.

While the health issue will still be a "work in progress" during the election campaign, the Government had at least hoped that the abortion issue would have been put away. In autumn, the Taoiseach produced his long awaited proposal to deal with the issue. The complex mechanism involved legislation to enable a referendum to approve legislation to roll back the x case judgement allowing abortion on grounds of threatened suicide.

Another abortion referendum was part of the price demanded by the four pro-Government independent deputies for their continuing support. The Taoiseach hailed it as representing a "middle-ground" position, but it quickly became clear that it would receive significant opposition from both sides of the debate. Labour came out strongly against it, Fine Gael seem set to oppose it while allowing individual deputies campaign according to their conscience. On the conservative side, the recently formed Mother and Child campaign are to oppose it on the grounds that it does not afford protection to a fertilised ovum before implantation.

The Progressive Democrats sat on the fence as the debate became polarised, sticking to the Tanaiste's line that they would support the holding of a referendum only if there was "broad middle-ground support". A fortnight ago PD Senator John Dardis came out, with the prior knowledge of his party, to say such support was not there.

The party has yet to make a final pronouncement. But not only is the Government consensus behind a referendum under threat, the strength of opposition means the Government proposals stand no chance of receiving overwhelming endorsement in a referendum, and could even be defeated.

It would be the second referendum debacle for the Coalition in under 12 months. Last June a lacklustre Government campaign together with anti-EU postures taken by Ministers McCreevy and de Valera led to the shock defeat of the Nice Treaty in a referendum. A mixture of anti-militarists, sovereigntists, anti-abortionists and anti-capitalists combined to bring about the first reverse in Ireland for the pro-European integration movement.

The Nice Treaty must be approved by Ireland before the end of 2002 if it is not to fall. This Government certainly isn't going to risk putting it to the people again, leaving the next administration to attempt to salvage the situation. However the Government's Forum on Europe - boycotted by Fine Gael - is attempting to tease out the issues that led to the defeat in a way that the pro-Nice campaigners hope will make it easier to win support if ever the people are asked to vote on it again.

In the meantime, the convention to discuss the future of Europe set up at the Laeken Summit earlier this month may ultimately supersede Nice with something more ambitious.

The "standards in politics" issues rumbled on throughout 2001 for Fianna Fail with Liam Lawlor jailed, Beverley Cooper Flynn forced out of the parliamentary party after losing her high-profile libel action against RTE and Ned O'Keeffe resigning under pressure over his non-declaration of the family business's meat and bone meal licence.

The turn of the year will see all parties and independents in full election mode as the longest-serving government in peacetime finally moves towards its end.

And while the election agenda may already appear to be set, the nature of politics may well ensure that the campaign will be dominated by an issue which nobody has anticipated.