Ireland’s Main Parties Seal Coalition Deal to Retain Power

(Bloomberg) -- Ireland’s two dominant political parties will return to power for another five-year term after agreeing a new coalition deal following weeks of negotiations.

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Fianna Fail and Fine Gael had been in talks since an election in late November, when they fell just short of a majority of seats in parliament. To reach that number, they’ve secured the backing of a number of independent lawmakers.

The new program for government included a number of commitments on housing, public services and improving infrastructure including a new government division to tackle deficits. It also committed to recognize the role data centers play in contributing to economic growth, as well as enhancing its engagement with the US and strengthening its defense capabilities.

The deal means Ireland is an outlier in the recent election trend of incumbents getting dumped out of office. While the country has, like many others, seen a backlash against immigration, there’s no large single right-wing group that has been able to take advantage and seriously challenge the main parties. In addition, Fianna Fail and Fine Gael were able to win over voters with a giveaway budget weeks before the vote.

The country is running a huge surplus thanks in part to soaring tax revenue from US firms with operations in Ireland. But that enviable position — boosted by a record €39 billion ($40 billion) in corporate tax receipts in 2024 — is volatile, and the finance ministry has warned that the state can’t count on that income indefinitely.

Such concerns have been exacerbated by Donald Trump’s election as US president. Howard Lutnick, Trump’s pick to lead the Commerce Department, has previously singled out Ireland for criticism, saying it ran a surplus at the US’s expense.

“The broader political geopolitical environment of what’s happening in the US in particular is likely to feature” in the new term, said Aidan Regan, Professor of Political Economy at University College Dublin. “I suspect we will see a more prudent government now that Trump is in office, and they would probably be a little bit more willing to spend and invest more if he wasn’t in office.”

In the election, Fianna Fail won almost 22% of the vote, followed by Fine Gael on 20.8% and Sinn Fein on 19%. Labour and the Social Democrats were just below 5%.


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