IRELAND’S economy was once again thrown into turmoil yesterday afternoon, as the country’s minority Green Party pulled out of its coalition with Fianna Fáil, destroying the ruling party’s majority and making an early election likely.
But the Green Party made it clear that passing the Finance Bill remained its priority, and urged Prime Minister Brian Cowen to accelerate the legislation so that it can be passed this week.
Speaking in Dublin, leader of the Green Party John Gormley said that his party’s “patience had reached an end” with Fianna Fáil’s control of the Irish Government, citing “continuing doubts, the lack of communication and the breakdown in trust,” as the final straws that led to its withdrawal from the coalition.
Without the Green’s support, Fianna Fáil is left without a majority, forcing Cowen to dissolve his government and call a general election.
With Fianna Fáil opinion polls at an all-time low, the opposition Fine Gael and Labour parties are widely expected to form the country’s next coalition government after an election. Both parties have campaigned on possible amendments to the Finance Bill, which contains unpopular spending cuts and tax increases to fulfill the terms of Ireland’s EU/IMF bailout.
However, the Bill’s key terms are unlikely to change, with the Labour party vowing to withdraw its planned motion of no confidence tomorrow if the government can push the legislation through before Friday.
Despite the ultimatum, Cowen admitted that meeting that deadline was unlikely, saying it was “not possible to get it done in a week”.
And despite assurances that the Finance Bill will be passed before the election, analysts say Ireland is lucky that EU support means it won’t have to access Eurozone markets in the weeks ahead, with sentiment likely to have plummeted over the weekend.
“The markets may actually be marginally reassured that there is the lending programme in place from the EU and IMF – in the absence of that it would be a very tall order for the NTMA (Ireland’s debt agency) to go to the bond markets,” said Austin Hughes, chief economist at KBC Bank.