Polling station in Ireland.
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The election will take place in Ireland on November 29th. The centre-right parties Fianna Fáil and Fine Gael are again expected to form the core of the country's next government.
The historic rivals have shared power with the Greens for the past five years and recent opinion polls show both at high levels as the election campaign enters its final days.
Whoever leads the country after the vote will face some unique economic challenges and opportunities: Ireland has a budget surplus due to its unique position as the European headquarters of major US technology and pharmaceutical companies, while its balance sheet is affected by a The September 2019 ruling was strengthened by the European Court of Justice, which ordered Apple to pay 13 billion euros ($13.7 billion) in back taxes to the country.
On the other hand, there are concerns in Dublin that US President-elect Donald Trump will try to crack down on US companies paying taxes in Ireland instead of America.
Political perspective
The country's two largest parties once again appear to be on track to form a government, despite some difficulties for Fine Gael at the end of the campaign. The latest Irish Times/Ipsos B&A poll on November 25 shows support for Fine Gael has fallen by six percentage points to 19% in the last two weeks, while support for Fianna Fáil is now at 21%.
Support for the Sinn Féin Republican Party, which made big gains in the last general election, is currently at 20%, while independent candidates are polled at 17%. Ireland uses proportional representation and if no party can claim a majority in the election, a coalition is certain.
However, it is unclear what policy changes are expected given the influence that Fianna Fáil and Fine Gael are likely to have on a potential government.
Housing is a key issue and the Central Bank of Ireland warned in a recent report in September that Ireland's “housing market has been subject to undersupply for more than a decade,” adding that rising rents and house prices have hit affordability. The central bank further predicted that “around 52,000 new homes could be needed annually by mid-century, an increase of 20,000 units compared to supply in 2023.”
Homelessness across the country, particularly in Dublin, has reached record levels. According to official figures, almost 15,000 people were in emergency shelters in September, including 4,561 children.
Despite concerns about tight housing supply, Emma Howard, an economist at TU Dublin, said in an email to CNBC that Ireland still remains attractive to workers because it is “the only English-speaking country with access to the European single market, and they have that “We have a relatively younger and more educated workforce than our European counterparts.”
Budget bonus
The good news is that the country's finances are on solid footing, more than a decade after the government sought bailouts from the IMF, ECB and European Commission. A budget surplus has been recorded in the last two years. Finance Minister Jack Chambers announced in September that the country expected a surplus of up to 24 billion euros this year as a result of the ECJ ruling.
An additional boost came in mid-November when S&P Global Ratings upgraded its outlook for Ireland to positive from stable, adding that it may revise its ratings to AAA – the agency's highest grade – if Dublin “continues to build economic and fiscal buffers.” .
However, the report contained a warning to authorities that 10 foreign-owned multinational companies would be responsible for half of the country's corporate tax revenue in 2023.
However, Howard says: “If you remove 'windfall' corporate taxes, the proportion of government revenue that does not come from domestic economic activity, Ireland actually has a budget deficit and over the 2024-2030 period, current spending plans add up to a deficit of £50 billion euros.”
Many of these are US companies, and there could be clouds on the horizon for the country.
Trump's return
Donald Trump's return to the White House has sparked global concern as the president-elect moves to implement his “America First” policies.
This could also threaten Ireland's status as a tax favorite for American companies, as Dublin's corporate tax rate is currently among the lowest in the entire Eurozone. Back in October, the new trade minister, Howard Lutnick, shot across the bow when he denounced Ireland's trade surplus with the US. Lutnick threatened to put an end to what he described as “this nonsense.”
Cantor Fitzgerald's CEO is also expected to have “additional direct responsibility” for the U.S. Trade Representative's office under the new administration. President-elect Trump himself has business ties to Ireland and has owned a golf club on the west coast of the European country since 2014. He previously used the resort as a base for visits to Ireland during his first term as president.
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