OPINION: Brexit will weigh on the economic choices that the future Irish government will have to make, no matter which party ends up in power.
The Republic of Ireland is in the process of appointing a new government just as several years of strong economic growth may soon end, in the likely event Brexit inflicts a major blow to the economy.
Sinn Féin, the nationalist party that was once the political wing of the Irish Republican Army, was ahead with 24.5% of the vote, while the two other parties that have long governed Ireland either separately or together, Fianna Fáil and Fine Gael, received 22% and 21% respectively. Sinn Féin’s participation in a coalition would tilt government policy toward the left.
Ireland received a €67.5 billion bailout from the European Commission, the International Monetary Fund and the European Central Bank in 2010 after the collapse of its banking system. Subsequent severe austerity policies allowed the country to turn its finances around within a few years, to the detriment of public spending and social services. Ireland became the European model for a bailout that “worked,” whatever the social cost.
What the future government will do with that prosperity is one of the key questions the parties jockeying for a place should now discuss. Brexit is looming, and Ireland is expected to be its main economic victim in Europe. According to a paper from the country’s central bank, even an orderly transition to a UK-EU free-trade agreement would shrink GDP by 3.5% in the long run, and raise the unemployment rate by 1 percentage point.
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