Positive news on economy could kickstart parties’ talks

Further positive economic predictions due out next week could help open up breathing space for Fianna Fáil and Fine Gael to begin negotiating matters for a minority government.

Sources in Fianna Fáil say that fresh exchequer figures, expected on Monday, could help allow both sides resolve their demands when leaders Micheál Martin and Enda Kenny begin talks. Increased employment, more taxes and potentially a bigger ‘fiscal space’ to spend in the immediate years would allow for a broader agreement, including possibly breaching differences on Irish Water, say party sources.

Fianna Fáil will continue talks with Independents on Monday and Tuesday, to try to form its own minority government.

However, party sources say the real talks will start after a fresh vote for Taoiseach in the Dáil on Wednesday, at which another stalemate is expected when neither side wins enough votes. Fianna Fáil finance spokesman Michael McGrath yesterday suggested a full financial picture was needed for negotiations, in light of the fact the acting government has yet to supply the EU with its ‘budget blueprint’ as part a stability programme update.

This must be submitted to Brussels by the end of this month. There are doubts this will happen under a caretaker government.

The last detailed spending projections were in October.

“It is important that new fiscal space projections are now made which will take account of updated assumptions, as well as changes to Ireland’s medium-term budgetary objective.

“This would provide vital information which would help inform discussions on government formation without tying the hands of a new government in relation to policy initiatives it wished to take,” he said.

Fianna Fáil will continue talks with Independents next week. However, talks between Mr Martin and Mr Kenny will quickly indicate whether a second ‘Tallaght Strategy’ can be achieved, mirroring in some way the 1987 deal where Fine Gael supported a Fianna Fáil government.

Irish Water is expected to be the main stumbling block. However, further positive exchequer figures on Monday could give both parties space, when it comes to either side’s wishlist, say party sources. While there still will be pressures from trade unions for wage costs, an addition to the limited €500m spend for next year would help.

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