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Irish Labour Party Picks Burton as Deputy Premier-in-Waiting

July 04, 2014

Ireland’s junior government party picked Joan Burton as its leader and deputy premier-in-waiting amid mounting pressure on the ruling coalition to ease austerity in the wake of an international bailout.

Burton, 65, received 2,094 votes compared with 607 for Alex White in a poll of Labour members, the party said in a post on its Twitter Inc. (TWTR:US) account today. Prime Minister Enda Kenny nominated her to be his deputy premier after the election, he said in an e-mailed statement.

“Politics will dominate policymaking ahead of the next election in 2016 and Joan Burton is fortunate she’s taking over as the economy and public finances are beating forecasts,” said Dermot O’Leary, chief economist at Goodbody Stockbrokers in Dublin. The government can meet budget targets “with little or no new austerity measures,” he said.

The rise of Burton, a chartered accountant and lawmaker since 1992, follows the resignation of Eamon Gilmore as leader in May after a rout in local and European elections. Gilmore said at the time that his party paid a “high political price” for pushing through tax rises and spending cuts needed to help Ireland exit a three-year rescue program in December.

Lawmakers and analysts have since signaled a reduction in planned austerity policies, a shift that would be helped by a recovering economy. The International Monetary Fund and the European Commission, which led the country’s 67.5 billion-euro ($91.7 billion) bailout in 2010, are opposed to any such move.

‘Better Place’

“We’re now in a better place,” Burton said in a speech after her election. “If those trends continue, it will allow us to plan for a better Ireland, for investment in housing in education and key social services such as health.”

The new Labour leader, currently minister for social protection, said that the 2 billion euros of spending cuts and tax increases planned for next year’s budget “doesn’t make sense” amid signs of economic improvement, according to an interview with state-owned RTE Radio on June 25.

Burton is likely to seek more spending on public services in a bid to regain lost voters, according to Philip O’Sullivan, chief economist at Investec Bank Plc. This will also distinguish the party from government partner Fine Gael, which has signaled a preference for tax cuts, O’Sullivan said.

‘Main Battleground’

“The budget in October will be the main battleground for this,” said O’Sullivan. “As Bismarck said, politics is the art of the possible, so we’d expect a compromise to be reached.”

Her election comes in the same week as the publication of improving economic output, jobs and first-half budget data. Finance Minister Michael Noonan, a member of senior government partner Fine Gael, said yesterday that an upward revision of 2013 gross domestic product data means the government will beat its 4.8 percent deficit target this year.

“If everything else was to remain unchanged, the carry-over from the higher level of GDP would mean the deficit would be closer to 4.5 percent,” he said in a statement. “Indeed, if tax revenue continues to perform as it has done in the first half, the out-turn could be even better.”

When the Fine Gael-Labour coalition came to power in 2011, Ireland’s budget deficit was 13.1 percent and the nation was three months into its bailout program.

While Noonan said yesterday that the government debt was 116 percent of GDP at the end of last year, compared to a previous estimate of 124 percent, the level remains “unsustainably high,” according to O’Leary.

“We’ve got to decide what type of economy we want this to be: one of high taxes and high government spending or a low tax, low spend one. I’d prefer to see the latter,” he said.

To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; Donal Griffin in Dublin at dgriffin10@bloomberg.net

To contact the editors responsible for this story: Dara Doyle at ddoyle1@bloomberg.net Leon Mangasarian, Alan Crawford


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