Irish elections continue to be pro-business despite voter dissatisfaction

Ireland’s general election secured victory for the incumbent centre-right party, which has dominated the country’s politics for almost a century, and signals continuity in the business community, but widespread dissatisfaction with many social issues It is the other side of the coin.

Fianna Fail, led by Michael Martin, and Fine Gael, led by Simon Harris. It looked like it could form by noon Monday. The coalition government falls just short of a parliamentary majority in the 174-member Dáil, and is widely expected to seek support from one or two smaller opposition parties to form a government.

The key question will be who will take on the role of Irish leader Taoiseach, given that Fianna Fail will become the larger party, although Mr Harris currently holds the role. One possibility is a repeat of the rotating power share agreement the parties previously brokered in 2020. entered a coalition government for the first time.

Friday’s vote saw shock defeats for high-profile MPs, as well as for the former coalition Greens (holding just one of the 12 seats) and Fine Gael’s TD numbers. There was disappointment among the expected challengers, Sinn Féin. , but it seems unable to start its own coalition talks. Fianna Fail and Fine Gael are partnership excluded Along with left-wing parties.

Analysts at investment firm Davy said in a note that the result “breaks the trend seen internationally this year of poor incumbent election results.”

“The only surprise was that there were no surprises,” Laurent Mousellec, dean of Trinity Business School in Dublin, told CNBC by phone. “The only surprise was that there were no surprises. Voters want the same thing from us, at least that’s the outcome of the election. “I’m saying that,” he told CNBC.

“But at the root of this is a sense of dissatisfaction from a section of the Irish public that was not captured in this election. Turnout was 59%. “When you talk to people, you get a different feeling than what the results show,” Muzelek continued.

Ms Muzelek said the biggest contributing factor to these problems was the country’s dire housing crisis, with homelessness on the rise, particularly in the capital, Dublin.

Fianna Fáil and Fine Gael have made certain commitments to increase housing supply, but given the repeated nature of coalition government formation, it is unclear exactly which elements of the manifesto will be enacted in the future. Muzelek pointed out.

Some of that dissatisfaction is exit poll Only 27% of them said Fine Gael’s Mr Harris was their preferred leader, compared with 35% of Fianna Fail’s Mr Martin and Sinn Féin leader Mary Lou.・Mr. McDonald had 34%.

Economists say the country faces no economic threat from Donald Trump’s re-election in the United States, as he threatens sweeping universal tariffs and a protectionist “America First” stance. I doubt it.

“Among eurozone members, Ireland is by far the most vulnerable to U.S. trade losses,” Capital Economics economists Andrew Kenningham and Jack Allen Reynolds wrote in a note last month. said.

According to the research group, demand in the United States accounts for about 1.5% of euro zone economic activity, 1.7% in Germany, and 7% in Ireland, with Ireland “sending a disproportionate share of its exports to the United States. ”.

“The economy could also be affected by the US corporate tax cut if US-based multinationals are persuaded to move their operations from Ireland back to the US. That said, given Ireland’s other strengths, “We remain optimistic about Ireland’s economic outlook,” the economists continued.

Trinity Business School’s Laurent Muzelec told CNBC that the latest election results confirm that there is no significant political movement in Ireland calling for a protectionist shift from a very open economy. .

This is a sign that the region is “still a good place to do business, open to global companies and as pro-business as it has been for the last 30 to 40 years,” he said. spoke.

President Trump’s inauguration could influence future company location decisions, especially in the pharmaceutical industry where manufacturing facilities are involved, but the likelihood of any spillover is very low, Muzelek continued. .

“For large companies, they were originally here for tax reasons and now they’re companies with thousands of employees,” he said. “Many of those jobs are in EMEA sales and customer service. [Europe, Middle East and Africa] Therefore, they must remain in Europe. So where do you go when you leave Ireland? The UK is no longer part of the European Union, France is politically unstable, and other options are limited. ”