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Kenny Plots Second Irish Win After Inheriting ‘Unholy Mess’

Ireland's Prime Minister Enda Kenny
Ireland's Prime Minister Enda Kenny speaks during a session on day two of the World Economic Forum (WEF) in Davos. Photographer: Chris Ratcliffe/Bloomberg

Jan. 24 (Bloomberg) -- Irish Prime Minister Enda Kenny said his aim is become the first leader of his party to win two successive elections after clearing up an “unholy mess” in the economy he inherited from the previous government.

Fine Gael head Kenny is viewed as a candidate to succeed European Commission President Jose Barroso or European Union President Herman Van Rompuy, Transport Minister Leo Varadkar said in November. Their terms end later this year.

Under Kenny, who took power in March 2011, Ireland in December, left the international bailout program it fell into just over three years ago. Last week, Moody’s Investors Service restored Ireland to investment grade, dropping the junk rating it had placed on the credit in July 2011. Kenny is now pushing Europe to retrospectively refund the state a share of the cost of saving its financial system.

Ireland’s debt is “still very high, therefore it makes us fragile,” Kenny told Francine Lacqua and John Fraher in an interview with Bloomberg Television in Davos, Switzerland. “We need continued assistance.”

Government debt has surged to about 120 percent of gross domestic product, almost five times its 2007 level, as the state was forced to bail out its banking system.

The state injected 64 billion euros ($87.5 billion) into lenders including Anglo Irish Bank Corp. and Allied Irish Banks Plc after the worst real-estate crash in Western Europe.

“We happened to be one of the first over the edge,” he said. “The mechanisms that are available now weren’t available then.”

Irish Bonds

The yield on the country’s 10-year government bond, which surged to a peak of 14.2 percent in July 2011, rose 5 basis points to 3.34 percent today. The premium Ireland pays to borrow for a decade compared with Germany has fallen 1.69 percent from a high of 11.5 percent in July 2011.

Fine Gael is favored to lead the next government, in coalition with either Fianna Fail or current partners, the Labour Party, odds offered by Paddy Power Plc signal. Support for the party stood at 28 percent earlier this month, bookmaker Paddy Power said on Jan. 9, citing a poll by research company Red C. Fine Gael won 36 percent of the vote in 2011.

“The mandate given to me was to take our country out of an unholy economic mess that we had inherited,” Kenny said. “That mandate was to sort out our public finances and get our country working.”

Kenny said he hoped that Ireland’s closest trading partner, the U.K., would remain a “central part” of the European Union. U.K. Prime Minister David Cameron has promised to seek a new settlement with the EU, pledging to hold a referendum on EU membership by the end of 2017.

“The European Union would be much weaker without Britain,” he said. “It’s complex for Britain. One party wants out, another party sets a position that’s unclear.”

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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