Daniel McConnell: Economic road ahead decidedly rockier than most believe

The Green Party has never had such an opportunity to influence the running of this country, writes Daniel McConnell, Political Editor

Daniel McConnell: Economic road ahead decidedly rockier than most believe

Today is the day, hopefully, a dose of reality hits the talks aimed at forming a government.

The three parties involved in the talks — Fine Gael, Fianna Fáil and the Greens — will be briefed by officials from the Departments of Finance and Public Expenditure as to the true state of the country’s coffers.

The news is not good.

Our projected surplus of €2.5bn for this year will now be a deficit of up to €30 billion. Unemployment is running at almost 30%. The Irish economy has never taken a shake such a this, and the current fiscal crisis will not end as suddenly as it began but will overshadow our economy for several years to come.

Up to this point, a grand charade has been taking place.

Extraordinary measures have been taken to buffer and buttress the country from the impact of the Covid-19 pandemic:

  • Emergency wage supports running at several hundred million Euro a week.
  • Supports for companies aimed at keeping them afloat during the crisis.
  • The effective nationalisation of our health service at a cost of €115 million a month.

The scale of the Covid-19 crisis and the response to it has been much talked about.

The exit from this crisis and how we are going to pay for it has not gotten anywhere near the same level of attention.

Politically, a game of fantasy and make-believe has been played.

Yes, the Government has been right to prime the economy with money, given how cheaply we can borrow it on the markets, but the absence of any detailed road map out of the crisis has been worrying.

The people have been assured this is not like 2008 and we have plenty of money to cover the cost of this crisis.

Fine Gael and Fianna Fáil have poo-pooed the idea of austerity as a means of bridging the now expected €30 billion deficit this year and whatever the cost will be next year.

Boiled down, this means that Micheál Martin and Leo Varadkar have so far ruled out any tax hikes or cuts to welfare as a means of re-establishing order on the public finances.

Is it achievable? Many would say no and the Irish Fiscal Advisory Council have sounded warnings in this direction in recent days.

So if it is not achievable, what’s going on?

As Fianna Fáil TD Niall Collins told a private meeting of his own party two weeks ago, the game so far has been to “coax the Greens” into government formation talks.

Now they are in the process, the hope from the two older parties is that they will be less likely to walk away, even if the reality to what they face will be far different from the benign picture currently being painted.

Speaking to me in recent days, senior officials warned that the economic road ahead will be decidedly rockier than most believe or have spoken about to date.

As for the Greens' demands for a 7% reduction in carbon emissions, a great deal of scepticism hangs over how achievable it is in the current climate.

And their demands for an end to direct provision are seen as utterly unachievable when we have 400 people coming into the country every week.

“They want it all, for the world to be perfect but it isn’t perfect, is it?” was the deeply cynical response from one Fianna Fáil negotiator to me in the past 48 hours.

The Greens do certainly have a different way of doing things from the other parties. Sometimes such quirks, as Eamon Ryan has described them, can drive other parties demented as often they can take a lot of time to play themselves out.

But let’s not forget that the country voted for change on Feb 8 and a ‘super grand coalition’ of Fine Gael, Fianna Fáil and the Green Party would be a dramatic new departure to what has gone before in Irish politics.

While there are a lot of questions being asked of the Green Party’s appetite for power, the fact is that it has never had such an opportunity to influence the running of this country.

With a bloc of 12 TDs and with both Fine Gael and Fianna Fáil weakened and desperate, if the Greens can overcome their internal wrangling, they can also extract a far higher bounty in terms of cabinet seats and other plum posts than their numerical position would merit.

The only question is, can they seize the moment?

 

 

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