Bad beginnings to the autumn, with even worse to come

The new Government has not distinguished itself on Covid-19, and now Brexit is back in the headlines

"Clowns to the left of me, jokers to the right, here I am, stuck in the middle with you." British PM Boris Johnson; An Taoiseach Micheál Martin; and US President, Donal Trump.

"Clowns to the left of me, jokers to the right, here I am, stuck in the middle with you." British PM Boris Johnson; An Taoiseach Micheál Martin; and US President, Donal Trump.

Ordinarily, at this time of year, there is a sense of renewal as politicians, with their batteries recharged, return to work and a new Dáil term begins.

This year the mood is very different – it is as if there was no summer break at all with a series of political convulsions and the early recall of the Dáil. What then does the autumn hold in store?

New Government – a dreadful start

After an incredible 140-day wait - twice as long as it took in 2016 - we finally got a new Government at the end of June. The FF, FG and Green coalition have a comfortable majority in the Dáil, especially when the votes of sympathetic Independents are factored in, yet it has looked shaky from the beginning.

The tensions within and between the parties is reminiscent of another Government with a large majority - the FF/Labour coalition of the 1990s, but matters now, are arguably far worse than they were then. The Government is faced with an unenviable set of challenges, but are making matters worse through poor communications and an incoherent approach. Insider also feels the individual parties are trying too hard to carve out a distinct identity within Government, when a more collegial approach is needed.

It should be acknowledged that an equally valid comparison is Bertie Ahern’s minority government that came to office in 1997 and had a most jittery start before settling down and delivering a series of successes in its first year - although it had the advantage of governing in favourable climate.

'Fianna Fáil is in the last chance saloon and really needs to wise up and focus on the task in hand'

The current Government has had some decent achievements early on - the July Jobs Stimulus went down reasonably well, as has the successful return of the schools, with Minister Norma Foley winning plaudits after a shaky start. There was success on the European front too with Paschal Donohoe being elected President of the Eurogroup of Finance Ministers before disaster struck with the loss of Commissioner Phil Hogan in barely believable circumstances - a soap opera shot in Clifden and starring local TD Noel Grealish.

For all the doubts about the Green Party’s stomach for Government (and it has not been without hairy moments either ), most of the early problems have been within FF. FF has had several self-inflicted calamities, including the loss of two agriculture ministers and several public displays of the infighting, which sends out a bad message.

More generally, there is a sense of the party being rusty and ‘not match fit’ after a decade out of power; this contrasts sharply with FG whose current poll ratings can probably be attributed to its Ministers coming across as far more assured and professional. One might have expected FF to be chomping at the bit after so long out of power, but instead it seems tired and demoralised. The party is in the last chance saloon and really needs to wise up and focus on the task in hand.

'The State is divided into three camps – those that feel the Government are overreacting; those who feel it is not cautious enough; and those who feel it is getting the balance right'

It should also be noted that, for various reasons, the real cut and thrust of Dáil debate and the joust between Government and Opposition has not yet started; in one sense, this is still the Government’s honeymoon period. The Government is wasting it with self-inflicted disasters. With the Opposition, in particular SF and Labour (under new leader Alan Kelly ), waiting in the wings, the Government badly needs to up its game.

Covid-19

Insider warned last spring and early summer that the positive public mood towards the then government and its handling of Covid-19 would not continue. There was an inevitability that as the realisation that this virus was not going away soon took hold, and the challenges of living alongside it came to the fore, any sense of national unity would dissipate.

The State is divided into three camps – those that feel the Government are overreacting; those who feel it is not cautious enough; and those who feel it is getting the balance right.

The idea that ‘we are all in this together’ was always fanciful as Insider noted at the outset. The health effects of the virus skew heavily towards older people and those with vulnerable conditions. The economic impact will skew towards younger people, immigrants, and the low paid.

The virus itself has been more of a Dublin and urban phenomenon from the offset, yet the economic and societal effect will be more keenly felt in the regions, thereby exacerbating the vexed matter of the urban/rural divide. Covid-19, far from being a great equaliser is manna from heaven for those who thrive on and wish to sew division.

'One segment of the population are petrified and another segment have stopped listening'

The government and the National Public Health Emergency Team have not however aided their cause with continuous mixed messaging. There is a sense of policy being made on the hoof, a fear of ‘What are they going to come out with next?’ every time they meet to review matters, and the issuing of restrictions that appear contradictory or, more to the point are poorly explained. The result is one segment of the population who are petrified and another segment who have stopped listening. In sporting parlance, the Government and NPHET are losing the dressing room. It is to be hoped the new roadmap for ‘Living with Covid’ published this week marks a turning point.

Brexit and the Budget

The twin headaches of Brexit and Covid-19 create a most challenging budgetary environment for the Government. Minister Donohoe again reiterated we will not see income tax hikes in next month’s Budget, and overall, the Government is still minded to stimulate demand, rather than repair the hole in the national accounts.

'Brexiteers are likely to be unmoved by criticism that they are in breach of their international obligations'

Nevertheless, Tánaiste Leo Varadkar’s signal that we will see increases to PRSI in the next few years is a sign that there will be a bill to pay at the end of all of this. The Government needs the Budget to land well next month in order to settle nerves and put this administration on a firmer footing.

Brexit has been overshadowed by Covid-19 before returning with a bang last week when the British admitted candidly that they envisaged breaking international law and reneging on some of its commitments in the Withdrawal Agreement they signed only last December.

Brexiteers are likely to be unmoved by criticism that they are in breach of their international obligations. What should however rile a group of people who insist that sovereignty is sacrosanct to them, is that Boris Johnson called, fought, and won a General Election campaign on the deal he agreed late last year. For him to now renege on it would surely not be consistent with an argument that the British people and the parliament they elect is sovereign!

'The Tory electorate has changed in the past decade with blue collar voters in the midlands and north of England competing with traditional Tory voters in the Shires'

Turning to the substantive issue, it is the whole area of State Aid rules – the restrictions the EU imposes on Member State governments giving financial assistance to businesses that results in them gaining an unfair advantage in the Single Market – that is at the core, not only of this dispute, but the entire Brexit process.

So broad are these rules that in agreeing to apply them in Northern Ireland, they effectively apply to the entire UK. Instinctively, one would imagine the Tories would be very much in favour of restricting State intervention in private enterprise; however, this is not the Tory Party of William Hague or Margaret Thatcher. The Tory electorate has changed in the past decade with blue collar voters in the English midlands and the north of England now competing with traditional Tory voters in the Shires for the party’s attention. Intervening in certain sectors and regions has some appeal to the party now.

For the UK then, the choice was always stark. Either regard these State Aid restrictions as a red line item (and there is an argument that if you are going to leave you may as well do it properly ) in which case you are almost inevitably looking at a ‘No Deal’ Brexit, or alternatively, if you are prepared to accept these restrictions, with goodwill on both sides a trade deal should follow.

Prior to last year’s agreement, Insider felt the chances of a ‘No Deal’ were high because of this but, having signed the agreement (and Johnson would have known this at the time ) the UK were implicitly signaling that it was taking the other course. Hence, once the deal was ratified last December, Insider believed the British had made their bed and that a trade deal was overwhelmingly likely.

'On paper, the race appears to be Joe Biden’s to lose, but the same was true of Hillary Clinton this time four years ago'

Insider’s view has not changed, despite last week’s machinations which may have an element of playing to the gallery to them. Even now, Insider still expects a deal, but even so, Brexit will continue to pose challenges for Ireland in the years ahead.

Will Donald 'trump' Joe?

In a normal year, the US Presidential election would be a carnival that would grip political observers on both sides of the Atlantic. The backdrop to this particular contest is more dramatic than ever after four years of controversy and outbursts from President Trump, unrest on the streets of America this summer, and the President’s handling of the Covid-19 crisis.

On paper, the race appears to be Joe Biden’s to lose, but the same was true of Hillary Clinton this time four years ago. Having been overshadowed by the pandemic, the race is only truly getting underway now and a fascinating seven weeks lies ahead.

Indeed, domestically and abroad the next few months promise to be a bumpy ride with a huge degree of uncertainty. Let us hope we all make it to Christmas in one piece!

 

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