Wednesday 21 February 2018

Ireland feels global fallout of confidence over Greece

The rising popularity of left-wing parties, such as Greek Prime Minister Alexis Tsipras' (pictured) Syriza party, across the Eurozone should not be taken lightly by either politicians or financial markets
The rising popularity of left-wing parties, such as Greek Prime Minister Alexis Tsipras' (pictured) Syriza party, across the Eurozone should not be taken lightly by either politicians or financial markets
Colm Kelpie

Colm Kelpie

The Greek election has led to a spike in investor queries about political stability in Ireland, specialist bank Investec has said.

Many of the queries have come from fund managers in the UK, but concerns have also been expressed from investors in the United States reading and listening to reports of the rise in popularity of Sinn Fein and anti-austerity TDs.

Philip O'Sullivan, Investec economist, said the rise in queries was a surprise because it had been the first time since the crisis years.

"I did a couple of days marketing in London a week after the Greek election and it was brought up in every single meeting," Mr O'Sullivan told the Irish Independent.

"Post what's happened in Greece, there is more of an interest as to what is happening and the political scene in different Eurozone countries, particularly in the periphery.

"They are looking at Ireland and they can see that the political landscape is completely fragmented."

Investec is forecasting a general election to take place here next January or February, saying it doesn't believe the Government will run its full course until the spring.

"We would point to the fact that, for the most part, the Irish political landscape would be centrist political parties," Mr O'Sullivan said.

"There is no history of extreme ideological parties being in government in Ireland.

"Given that we're basically stuck with permanent coalitions, people are saying 'are people going to have to cut deals with parties that don't have the same philosophical view that we've been used to over the past decade'?" Mr O'Sullivan added.

"It's hard to give reassurance when poll numbers mean that any result is possible."

Davy stockbrokers said investors have been raising the issue as far back as the autumn of last year.

"It's a concern, but it's not as if anybody is selling Irish bond yields aggressively on the back of it," said Davy economist Conall Mac Coille.

"It is a question that people have been asking. While we're not seeing tangible signs of that becoming a real concern or people selling assets, as you approach the election that kind of interest is only going to increase."

Last month both Merrion Capital and Goodbody warned about political instability.

Merrion said the rising popularity of left-wing parties across the Eurozone should not be taken lightly by either politicians or financial markets.

And in its first quarter health check for 2015, Goodbody economists Dermot O'Leary and Juliet Tennent raised concerns about "the impact of dwindling support on government policy ahead of the election" and uncertainty surrounding the make-up of the next government.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business