Irish Labour Party Leader Gilmore Resigns After Rout

Irish Deputy Prime Minister Eamon Gilmore resigned as Labour Party leader after a rout in local and European elections wiped out much of its support.

At a press conference at the Foreign Ministry in Dublin, Gilmore, 59, said his decision to step down won’t destabilize the ruling coalition, in power since 2011.

The party paid a “high political price” for implementing policies needed to narrow the fiscal deficit, Gilmore told reporters. Labour must “hear, heed, and act” after the election on May 23, he said.

Voters punished the coalition last week and rewarded anti-austerity parties including Sinn Fein after enduring years of spending cuts and tax increases. Under a new leader, the Labour Party may seek a reduction in the 2 billion euros ($2.7 billion) of austerity measures planned for 2015.

“The Labour Party, like the electorate perhaps, is moving towards the left and tensions and difficulties within the government will increase,” said Eoin Fahy, an economist at Kleinwort Benson Investors in Dublin. “It still remains very unlikely that Labour will leave government and precipitate an election, given the large losses that they would suffer.”

The Labour Party won 51 seats in local government elections held last week, according to national broadcaster RTE. In 2009, the party won 132 of 883 seats.

Possible Contenders

Social Protection Minister Joan Burton and Expenditure Minister Brendan Howlin are among the favorites to take over as Labour leader, Paddy Power Plc, Ireland’s largest bookmaker, said.

From Galway in the west of Ireland, Gilmore became party leader in 2007. A student activist, he was first elected to parliament in 1989 and served as marine minister between 1994 and 1999. In the 2011 general election, Gilmore led the Labour Party to its best-ever performance, promising to put a brake on austerity.

Gilmore had to row back on some of his commitments, such as maintaining the level of child benefit, in government. Between 2012 and 2015, the coalition is looking for spending cuts and tax increases of about 12 billion euros to bring the deficit under a 3 percent of gross domestic product target.

The yield on Ireland’s 10-year benchmark bonds has fallen 6.63 percentage points to 2.71 percent since the Fine Gael and Labour took power in 2011. The government left an international bailout program in December.

Stable Government

Gilmore “has assured me that Labour remains fully committed to providing stable government, and to the completion of our mandate to fix our public finances,” Irish Prime Minister Enda Kenny said in an e-mail. “Eamon Gilmore and the Labour Party have been courageous in making the collective decisions that have pulled Ireland back from the brink of economic collapse.”

Gilmore joined his counterparts at other mainstream European parties in coming under pressure. U.K. Deputy Prime Minister Nick Clegg rejected calls to quit after his Liberal Democrats were almost wiped out in European Parliament elections. Spain’s main opposition party, the Socialists, lost almost half its support in the polls, prompting the resignation of leader Alfredo Perez Rubalcaba.

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