The Cost of Living’s Influence on the Upcoming Irish Election

Voters in the Republic of Ireland are set to choose a new government in under two weeks. Each political party aims to secure the electorate’s confidence in managing the nation’s presently strong economy. The country is experiencing record employment levels, inflation recently dropped below 1%, and the government was able to present a generous pre-election budget. However, the question remains: which economic concerns are foremost in people’s minds as they prepare to vote? According to a recent survey conducted by the Irish Times and Ipsos, which inquired about the most influential issue on voters’ decisions, the cost of living emerged as the dominant concern, cited by 30% of those surveyed. Establishing a new business inherently requires a degree of economic confidence. For one small business proprietor, initial operations have been positive. James Molloy, who co-founded his cafe Brosef with his brother in central Letterkenny, County Donegal, earlier this year, stated: “People don’t mind spending a bit more for a quality product and it is promising to see there’s a market for the brand.” Conversely, other enterprises within the hospitality sector experienced hardship during the post-pandemic inflationary surge, which reached its peak at over 9% by the close of 2022. Earlier this month, Perry Street Market, operating three cafes in the Cork city region, ceased operations immediately. Messages displayed in the cafe windows indicated that the hospitality industry has encountered “unprecedented challenges in recent years” and that “these difficulties continue to intensify”. Economist Austin Hughes noted that Irish households persist in experiencing the prolonged effects of inflation. He commented, “Many are still finding it quite a strain to make it to the end of the month.” Mr. Hughes conducts a monthly consumer confidence survey on behalf of the Irish League of Credit Unions (ILCU). Mr. Hughes’s findings indicate an improvement in confidence over the past year, yet he observes an absence of “a pronounced feelgood factor.” Dave Malone, chief executive of the ILCU, stated that some of their data also highlights ongoing financial strain, with loans being sought for unexpected household needs. He reported, “We’ve issued more than 200,000 loans of less than €2,000 in the last 12 months and, of those, 50,000 were for less than €500.” He added, “We have members coming into us, maybe a washing machine has broken down and they need finance to mitigate that challenge.” For numerous households, the most significant financial hurdle continues to be the expense and accessibility of housing. Figures from the property listings platform Daft.ie reveal that advertised rents in the third quarter of this year increased by over 7% compared to the corresponding period in 2023. This pushed the average advertised national monthly rent to just below €2,000, while in Dublin, the average approaches €2,400. Rental prices have now seen an upward trend for 15 consecutive quarters, a consequence of housing demand consistently exceeding supply. The government has faced difficulties in meeting its housing supply objectives, partly attributable to a legacy of insufficient investment. Alan Barrett, Director of the Economic and Social Research Institute (ESRI), stated that following the nation’s financial crisis in the late 2000s, public investment was “cut back severely for a prolonged period of time.” Subsequently, as the economy and population expanded from the mid-2010s, an infrastructure deficit widened. Mr. Barrett further commented, “Our difficulty at the moment is we’ve lots of money to spend on infrastructure investment, we just don’t have the construction workers to deliver it.” Theoretically, this situation ought to pose the most significant challenge for Fine Gael, a key partner in the governing coalition, which has held power for the past 14 years in various capacities. The party’s position has been undermined by its former housing minister, Eoghan Murphy, who, in his memoir, critiqued the party’s performance. He informed the Business Post newspaper, “We didn’t escalate housing to priority number one – because we didn’t want to,” adding, “It was a choice we could have made.” Returning to Letterkenny, a reminder exists that Ireland’s economic success is not universally experienced. The We Care foodbank, situated discreetly behind several shops, has served the town for the past 10 years. Fintan McGrath states, “We help 80 to 100 families per week.” Mr. McGrath reported a 40% rise in demand for their services since 2021. He clarified that this surge is not solely due to the cost of living but also reflects another significant national shift: immigration. Mr. McGrath commented, “When we started off the number of immigrants was way lower.” He elaborated, “We have the situation in Ukraine, people coming from Asia, South America. We give help to whoever comes through our door.” While increased immigration signifies Ireland’s economic achievements, its management presents another topic for the upcoming election.