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Bond Yields Don't Butter Your Parsnips: Explaining the Irish Election

  • Irish government faces losing majority in Feb. 26 election
  • Economy best-performer in euro region but pay little changed

Ireland holds national elections on Feb. 26, the first since the Enda Kenny-led coalition swept to power in 2011 with the promise of revitalizing the economy and restoring the nation’s sovereignty by exiting the international bailout program he inherited.

To an extent, Kenny has succeeded. Ireland left the rescue in 2013 and reclaimed its spot as the best-performing economy in the euro region. Yet his government could well lose its overall majority, polls show.

Why? As former government minister Pat Rabbitte has said: “bond yields butter no parsnips,” meaning that voters don’t care much about headline economic numbers, they care about jobs and pay. Here are four charts that show what is helping shape the campaign.

Bond Yields

Everybody in Ireland understands bond yields these days, Expenditure Minister Brendan Howlin said last week. And by that metric, Ireland is a star, with borrowing costs below nations including the U.K., Spain and Italy.

Economic Growth

On a headline level, Ireland’s economy grew a near-miraculous 7 percent last year, and is set to grow another 4.5 percent this year, the European Commission forecasts. That’s the fastest pace in the euro region.

No Parsnips

As Rabbitte pointed out, voters care about jobs and pay. Pay increases have been subdued in recent years as unemployment hovered above 10 percent until recently and public-sector wage cuts haven’t been restored.

Rainbow Coalition?

It all adds up to a mixed picture. Kenny’s Fine Gael is likely to end up as the biggest party, polls show. But his coalition will probably lose its majority. The alliance drew 37 percent support in a Red C survey for Paddy Power Betfair Plc released in Dublin on Tuesday, in what’s likely to be the last gauge of public opinion before the election.

So Ireland could be facing a new so-called Rainbow coalition, or a government of more than two parties, a throwback to the Fine Gael/Labour Party/Democratic Left administration that ruled between 1994 and 1997.

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