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Irish index stutters as Sinn Fein demands to be included in government

By Lawrence Gash

Socialist-nationalist party makes shock gains in Irish general election

Sinn Fein’s unexpected surge in Ireland’s general election has taken a toll on the country’s main share index. By mid-afternoon trading the ISEQ All-Share Index stood at €7,075.59, down 75.88 points or 1.06 per cent.

The socialist-nationalist party has upset the country’s longstanding centrist duopoly winning 24.5 per cent of the first preference votes, ahead of Fianna Fail’s 22 per cent and Fine Gael’s 21 per cent.

While no party will win enough seats to obtain a majority, Sinn Fein’s leader Mary Lou McDonald hailed the result as “something of a revolution in the ballot box” and demanded to be included in the future government.

Ireland’s property firms have been the hardest hit by the result. During the election campaign Sinn Fein vowed to deliver the largest public housing programme in Irish history, at the same time abolishing the current Help-to-Buy scheme and freezing rents.

A decade after the country’s property bubble burst, Ireland is still enduring a housing crisis with homelessness on the rise and levels of immigration increasing.

The economically liberal policies pursued by successive Irish governments in recent decades have attracted major international tech companies to the country. Dublin has become one of the top 10 most expensive places to rent in the world, thanks in large part to employees at the likes of Google and Amazon.

The ISEQ’s biggest losers thus far are all property firms, with Cairn Homes, Glenveagh Properties and Irish Residential Properties all falling more than 8 per cent by mid-afternoon trading.

Ireland’s two largest banks have similarly suffered following the upset. With Bank of Ireland and Allied Irish Banks (AIB) falling 6.49 and 6.80 per cent respectively. Sinn Fein had promised radical change to Ireland’s banking rules, in particular an end to the tax breaks that have helped the "Celtic tiger" regain some of its strength since 2008.

Both main parties going into the election ruled out entering into any coalition with Sinn Fein. But with all votes still to be counted and the scale of the shock only just registering the final outcome of the election remains uncertain.

Sinn Fein’s rise will also add to the uncertainty surrounding Brexit. Commentators had remarked in recent weeks on the much-improved relations between Ireland’s Taoiseach Leo Varadkar and British Prime Minister Boris Johnson. Relations between the two countries are widely expected to deteriorate by comparison should Sinn Fein obtain a role in the next government.

The party is committed to a united Ireland and has historic links to the Irish Republican Army (IRA) and the Provisional IRA. As recently as 2005 the British government said: “We had always said all the way through we believed that Sinn Féin and the IRA were inextricably linked and that had obvious implications at leadership level.”

However, recent surveys suggest that Sinn Fein’s recent success is due in large part to popular dissatisfaction with the current duopoly and a desire for an improved welfare state, rather than a groundswell for Irish unity.

FURTHER READING: France fines Google €150m for abusing its dominant position

FURTHER READING: Over a thousand EU financial services firms plan to open UK offices post Brexit

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