Kenny’s Irish Government to Survive After Surprise Vote Defeat

Ireland’s government has the numbers to survive another setback, after voters unexpectedly rejected Prime Minister Enda Kenny’s plan to abolish the upper house of parliament.

Voters on Oct. 4 rejected the government’s plan to eliminate the upper house, known as the Seanad, even after opinion polls signaled that Kenny’s proposal would be carried.

Analysts and economists said the defeat probably won’t destabilize Kenny’s coalition government as it attempts to exit the bailout program the country entered three years ago. The government will next week push through its third austerity budget after the coalition swept to power in 2011, winning 113 of 166 parliament seats.

“While the result was embarrassing for the government, I don’t see any major political fallout from the referendum as attention quickly shifts to the budget,” said Ryan McGrath, a Dublin-based analyst with Cantor Fitzgerald LP, in a note today.

The Seanad has 60 members, none of whom are directly elected by the country’s voters. The prime minister nominates 11, a group of university graduates elect 6 and politicians vote for the remaining 43. The chamber has little power compared with the Dail, the directly-elected lower house.

Labour Pain

Fine Gael was joined in its bid to abolish the Seanad by the Labour Party, the junior member of the coalition, and Sinn Fein. Gerry Adams, president of the latter party, said the government ran a “ridiculously dismal” campaign.

So far, the Labour Party has been the focus of voter ire for the continued austerity that marked Kenny’s administration. Support for party fell to 6 percent last month, the lowest in 26 years, an Irish Times/Ipsos MRBI opinion poll published last week showed. Backing for Fine Gael rose to 26 percent.

Glas Securities, a Dublin-based fixed-income firm, said the result may make the government’s job “that bit more difficult.”

Still, there’s “little threat” to the coalition’s stability, the firm said in a note.

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