Ireland after NAMA

Another guest post from Iceland, this time from Huginn Freyr Þorsteinsson.

In the early days of the present financial crisis Iceland became one of the poster children for the crash that seemed inevitable. Some commentators thought Iceland’s problems were an indicator for what would soon be the fate of other countries that had prospered in the days of the economic boom. The question was posed in early January 2009: “What’s the difference between Ireland and Iceland? – One letter and about 6-months!”

The question was valid. Although Ireland did not expand its banking system nearly as much as Iceland did the situation in Ireland was serious enough. Both countries had followed neo-liberal policies in trying to lure investors to the country with deregulation, lowering of taxes and privatization. For this the two respected countries got lauded by neo-liberal economists who stated that the proof was in the pudding – economic growth was staggering in both cases. But what is the situation now one year has gone by since the above question was posed?

I think it is fair to say that the doomsday scenarios put forward in October 2008 for Iceland have not materialized. Also that predictions for other countries such as the Baltic States, Ukraine, Ireland, Spain, Italy and Greece turned out to be wrong because they were too optimistic. The status of these countries is now catching the international media headlines whilst Iceland has somewhat gone out of the spotlight and news that Iceland’s economic contraction was smaller then envisaged, unemployment figures lower, less capital needed to put into the resurrected banks and a huge turnover from a massive trade deficit to trade surplus has not surfaced.

Three major differences separate Ireland and Iceland. One is that we do not have the Euro which is extremely helpful when we need to rely on exports and a trade surplus. The Icelandic krona gives way whilst the crisis in Ireland has little or no impact on the Euro. Once an expensive place of travel, Iceland is now actually a relatively cheap destination, helping the tourist industry staying strong despite diminishing tourism around the world. The same goes for the export industry which benefits greatly from a weakened krona as it gets more kronas for the products exported.

The second difference is that Ireland went for an all-out bank bailout whilst Iceland took deposits and matching important assets (loans to individuals and Icelandic companies etc.) and put it into new banks whilst letting the old banks go into administration. This manoeuvre was implemented through emergency legislation in October 2008 in order to protect the Icelandic economy from collapsing along with its gigantic banks (their size was 8-10 times Iceland’s GDP at the time of collapse). This means that the sovereign did not try to stand behind the big banks but used the opportunity to heavily trim them down which in turn has made Iceland’s external debt many times lower than it was in the months before the crash.

The third difference is the future unforeseen impact of pensions on the tax payers’ money. One thing we do know is that the future number of pensioners in Europe will be considerably higher than today and more money is needed to fund pension schemes. When it comes to calculating the government debt or obligations of the state such numbers are left out but it is quite evident that many states will struggle with meeting pension obligations. Iceland has a well funded pension system and as seen on the picture below will be well off in meeting these demands and will probably not have to rely on tax payer money.

Pension fund assets growing in relation to the size of the economy (OECD Pensions and Markets 2008)

The ratio of OECD pension fund assets to OECD GDP increased from 70.7% in 2005 to 72.5% of GDP in 2006. The largest asset-to-GDP ratio was Iceland’s, at 132.7%.

However, Iceland has become very indebted because of the need to take loans to support its currency, restore the banks, resurrect the Central Bank (which went bankrupt), reimburse depositors in the UK and the Netherlands for the Icesave accounts and tackle a massive government deficit. At the moment the Icelandic government is working with the IMF and the Nordic countries in order to get the economy back on track and hasten the recovery. The IMF is working in close collaboration with a left-wing majority government whose finance minister, Mr. Steingrímur J. Sigfússon, comes from the Left-green Movement. The situation for the IMF is probably quite unique as they are dealing with a crisis that is a result of radical neo-liberal policies as opposed to lack thereof. Traditionally the IMF has thought such policies were medicine for failed economies but now the case is the opposite.

The uniqueness of the Icelandic case might be seen in how multi-dimensional it is. It is a bank crisis, a debt crisis (households and companies), a currency crisis and a tainted reputation. But as events unfold in the world economy Iceland’s difficulties seem to be less and less unique. Other countries seem to be catching up quickly and even possibly have already left us behind.

Huginn Freyr Þorsteinsson is adjunct professor at the University of Akureyri.

This is the first in a series of guest blogs from geographers around Europe. Edward Huijbens is a geographer based at the University of Akureyri in Iceland.
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On the Friday before the big weekend in October 2008, when the whole finance sector in Iceland came tumbling down, there was tension in the air. During lunch time news a revered economist at the University of Iceland had stated that the banks were bankrupt with unforeseeable consequences for the nation at large. The was obvious panic in his voice and I rushed back to the office, where we gathered round the computer and listened to a replay on the internet of the news. We had not much to say – we were just numb and awestruck. On the Monday after the weekend big news were afoot and the PM was to address the nation on TV at 4pm. The nation came to a stand-still and we watched as the PM announced that the finance sector had capsized and might suck the whole nation in. He ended with the famous Bushian “God bless Iceland”.

Immediately it was clear that this collapse manifested regional disparities within the country. Around the small villages and towns around the cost people shrugged and said; we have had recession here for 30 years, this will not change much. Whilst in the capital region Reykjavík and bigger towns namely Akureyri and Reykjanesbær, the effect was felt more, but also the need to invest all the bubble capital accumulating was mainly manifest there, in highrises, roadworks, big building projects and new boroughs. Now these are all half-done and on hold.

Mostly people were at first numb, did not know what had happened and how. In August 2008 the nation was on the top of the world, with a booming economy and just having won a silver medal in the Olympics in handball. When the handball team returned home tens of thousands filled the streets in Reykjavík as they received a royal welcome – national pride was rampant and all of a sudden it was all gone. Overnight we became equated with Zimbabwe and the likes in international media.

Then it began to dawn on some that the system we had built was fundamentally corrupt, through nepotism, and the ideological dogma of neo-liberalism was flawed. This was of course obvious to many beforehand, but the debate could never be sustained in the face of the amazing wealth that seemed to be pouring into the country. The only political party (the left green) that raised concern was absolutely ridiculed. As one left green parliamentarian suggested that the banks should just leave the country and set up HQ in London, the media uproar was immense.

As it dawned on the general public, various groups started to emerge and talk on various issues: general mis-trust at the political establishment was rampant so new ones formed. The most prominent one started the first Saturday after the collapse in October to rally people at 3 pm on the centre square in Reykjavík in front of the parliament house. There for 30 minutes 3-4 people would give short speeches on their take on the situation and the organiser, the well known civil liberties activist Hörður Torfason, would talk to people reminding them to come next Saturday. His aim was simple, to come every Saturday until three of his demands would be met: 1) That the director of the Central Bank would be ousted, 2) the government resigns and 3) that a general elections will be called.

The firm use of public space to voice simple clear demands became the platform for the change that would in the end occur. People held on to these meetings, and the media made more and more of them as people started coming in their thousands. What at first was a handful of people had by January 2009 become at least 10,000 people (bear in mind in Iceland the population is 320,000 in total). This mass of people simply could not be ignored and when the parliament reconvened after Christmas mid-January, Hörður urged all to come to the square and bring anything that could make noise – this time they will listen. People grabbed pots and pans mostly and filled the central square banging them along with percussionists and blaring horns. Inside the parliament people needed to shout to be heard, but still the parliament members and PM pretended as if nothing was going on. This so infuriated people that they came back the next day and the day thereafter and what unfolded was what later was called the “Kitchenware” Revolution and the government resigned. An interim government took over and general elections were called. There was change and a left government gained clear majority – but now, almost a year on, we are in the interesting situation that this new government seems to be doing all it can to resurrect the former system that collapsed in all its nepotistic and corrupt glory. We are a bit confused up here now and what next we do not know, except it seems clear that it is the tax-payer who will pay.

The lesson in this for me is that clear demands have to be set, with a clear structure and platform for the voicing of these demands: where come hell or high water, the demands will be voiced, and if not heard accompanied by pots and pans. For me the pivotal role that public space plays in the strategic locations, such as ours in Reykjavík, cannot be underestimated.

A hammer and a thick steel frying pan  can sever eardrums!

Eddie from Iceland

The Irish Times has reported today that several financial institutions that are having their (bad) loans transferred to NAMA are asking for the state agency to reduce the amount of documents and data required for the transfer to be processed. As it stands at the moment, the institutions are requested to provide over 1,000 pieces of info for each loan facility (The Irish Times, 24/03/10), including key valuation data. The amount of paperwork to be produced is quite huge, and some lending institutions have expressed a concern with the time and staff that it takes to collect the information and to report back to NAMA in order for the loan to be transferred to the state agency’s portfolio. What makes the gathering of data even more complex is the fact that many of the required information were not on the original loans’ paperwork. This is maybe for this very reason that the financial institutions’ request to cut the amount of data required by NAMA and to fast-track the transfer of their loans to the state agency comes as a bit of a surprise: didn’t we end up in this situation as the result of a lack of rigor, proper procedures, and transparency in the lending process by the very financial institutions that are asking for a sped-up (expedited?) process?

Delphine Ancien

Tanaiste Mary Coughlan has come under fire for her recent comments, during a BBC interview, about young people emigrating from Ireland. Coughlan appears to suggest that emigration is a welcome rite of passage, and that current emigrants from Ireland have the social capital to allow them to move freely. Her comments have been criticised by fellow politicians, and by letter writers to newspapers who claim she is understating the crisis of emigration.

The outrage about Coughlan’s comments stem in part from a refusal to acknowledge that emigration from Ireland continued during the Celtic Tiger era. Indeed, geographer Bronwen Walter has pointed out that many of those who emigrated from Ireland to the UK in this period ”were facing a range of experiences of disadvantages and limited options for improving their lives” (2008: 189). These emigrants, and the social and economic conditions that led to their departure from Ireland, are among the hidden stories of the Celtic Tiger.

One consequence of the denial of recent emigration is that emigration statistics, limited though they are, are being used to construct a contemporary moral panic.  Yet, even in the middle of the Celtic Tiger era, thousands of young Irish worked in Australia, New Zealand and Canada on one-year working holiday visas, and their migration was celebrated rather than seen as a cause for concern. There has clearly been an increase in this type of temporary migration (see Figure 1), but from an annual base of over 10,000 over a sustained period.

Figure 1

Similarly, there is as yet no clear evidence for a significant increase in Irish emigration to the UK, at least in terms of National Insurance numbers issued to Irish nationals (see Figure 2). In other words, accounts of the increase in contemporary emigration from Ireland need to take into consideration the baseline levels of emigration during the Celtic Tiger era.

And what of current, well-educated emigrants from Ireland, with their degrees and their Phds? We have to hope that their experiences do not mirror those of well-educated immigrants to Ireland, whose qualifications and experiences were often discounted in Celtic Tiger land. Research by the ESRI, for example, highlights the fact that it is difficult for many immigrants in Ireland to gain access to more privileged jobs (e.g. managerial, professional), regardless of their qualifications.

It appears, from CSO publications, that there is an increase in emigration from Ireland. Just who those migrants are, and their reasons for and experiences of migration, are questions we still need to answer.

Mary Gilmartin

In recent days two conflicting reports have emerged as to the health of the Irish residential property market.

According to the Irish Independent, one of the two Irish home-registration firms, Premier Guarantee, did not register a single house in January. Premier Guarantee’s larger rival, Homebond, only registered 149 houses in January, including just 24 in Dublin.  At the peak of the property market in 2006, Homebond was registering 6,122 houses a month or about 72,000 in a full year. Premier, the smaller of the two registration services, was registering about 2,117 houses per month, or almost 25,000 per annum. Of the 149 houses registered with Homebond in January, 62 were in Cork, 16 in Kildare and 24 in Dublin. In most of the other counties there were less than three houses registered, with many counties only registering a single house. Premier Guarantee and Homebond provide structural defect cover for new homes in the first 10 years after construction. The number of new homes registered with these firms is regarded as a reliable indicator of Irish housing starts.

However, data emanating from Property website Myhome.ie identifies a threefold increase in the number of ‘sale agreed’ second-hand homes in January compared to the same time last year. According to Myhome.ie, 658 properties reaching sale agreed status in Dublin last month compared with just over 200 in January 2009. Similar trends were seen in Kildare, Wicklow and Meath.

These conflicting reports raise a number of questions about the underlying trends at play in the Irish residential property market. The Myhome.ie data may be capturing some pent-up demand among a cohort of buyers, who are eager to snap up what they perceive as bargains in the Greater Dublin Area. If so, is it only a matter of time before this pent-up demand is expended? In that case, is the Myhome.ie data indicative of a dreaded “dead cat bounce”, prior to a prolonged property market slump? Even if Myhome.ie has uncovered positive property trends in Dublin, Kildare, Wicklow and Meath, the residential property market outside of Leinster may be in a far worse condition than the Myhome.ie figures suggest.

One may be tempted to withhold judgement until a detailed property price index is released. This may take longer than expected:  the Permanent TSB / ESRI House Price Index  will now be issued on a quarterly basis rather than the current monthly format. The reason cited for this? low sample size.

Declan Curran

Recent attention to the closure, followed by re-opening, of Carluccio’s (Which itself had only recently replaced the long-established Graham O’Sullivan’s) on Dawson Street in Dublin raises a number of interesting issues regarding city centre rents, recent planning practices, and attitudes to retail trade amongst a number of bodies within Dublin city centre.

Throughout the boom years a number of prime retail areas in the city centre were designated by Dublin City Council as Architectural Conservation Areas (ACA’s), and, directly connected to this, Schemes of Special Planning Control (SSPC) (An area had to be designated as an ACA in order to become a  SSPC). While seeming somewhat innocuous in their own right, there was a particular rational for so many retail areas to be designated as such. A primary aim of a Scheme of Special Planning Control is to remove what are perceived as ‘undesirable uses’ (fast food outlets, convenience stores) and attain ‘Higher Value Uses’, or ‘niche’ shopping, in an area. Furthermore, such uses, it is perceived, will then attract higher rents, and higher land values which would support more of the same higher end uses. However, in reality, prior to the bust, it seemed it was those stores that were best able to pay higher rents that remained in an area where land values were going up. This, somewhat ironically, includes fast-food outlets, such as McDonalds and Burger King.

While the above connections may seem slightly tentative, the introduction of  the Business Improvement Districts (BIDs) model to Dublin is more explicit in terms of the connection between the re-ordering and increased control of urban space and higher land-values. Just over a year and a half ago, the designation of much of the city centre area as a BID was heralded for its ability “to increase footfall, decrease crime, increase property values and overall trading performance.” Therefore, it must be assumed that the potential for higher rent generation is also perceived as one of the positive outcomes of the BID. Given that the Dublin City Business Association was directly involved with, and lobbied for the introduction of, the BID, it must also be assumed that they were also in favour of higher rents. Now, as illustrated by recent reports, and despite the removal of upward only rent reviews, city centre retailers, such as the owner of Korky’s shoe store on Grafton Street, are becoming increasingly worried about the impact of the retention of higher rents that they cannot afford on the future viability of their business.

If it is these high rental values which are now turning out to be the nemesis of the viability of trading in the city centre, the question must be asked as to why higher land-values were heralded as one of the positive outcomes of the BID mechanism. It seems that the desire for more up-market  land-uses only ads to an already existing cycle of unsustainable rent increases, which in turn, as evidenced by the growing number of empty units on streets such as Grafton Street, leads to vacancy.

Philip Lawton

The Irish Times reported two interesting stories on Saturday which both raise questions about NAMA.

The first story concerned the re-valuation of two development sites.  The first site in Athlone, Westmeath, valued at €31m in 2006 has just been re-valued at €0.6m (a drop of 98%).  The second site in Sallins, Kildare valued at €17.5m at the market’s peak is now valued at €4m (a drop of 73%), holding up a little better in value one presumes because of its proximity to Dublin and its siting on a commuter rail line.  As we’ve posted previously, these drops in valuation are not exceptions.  City centre prime sites such as the 24.9 acre Irish Bottle Plant site in Ringsend bought for €412m in 2006 is, according to the Dublin Docklands Development Authority (DDDA), presently worth €50m (a drop of 87%), while its Long Term Economic Value (LTEV) is €62.5m.  The national average price paid for farmland in 2009 was €9,678 per acre, a drop of 43.3 per cent on the average price of €17,081 per acre in 2008 (and this was on top of a drop in 2008).  It therefore seems likely that both zoned and serviced development land and unzoned land in Ireland has dropped substantially in value, probably somewhere between 70-98% depending on the site and the original amount paid.  36% of NAMA’s portfolio is land, with loans worth €27.8b attached to them, and it is likely that a proportion of the ‘development loans’ category (28%, €21.8b) also consists of development land.  67% of NAMA portfolio relates to land and property in Ireland, and although we do not have details of the geographic location of all NAMA land holdings it is probably a fair bet that 67% or more of it resides in Ireland.

The value of land destined for management by NAMA then is likely to be far below the 30% ‘haircut’ the government has proposed to pay.  It is difficult to see how a profit, one of the aims of NAMA, could be made with respect to land holdings over its proposed life span unless a 70-90% haircut is applied to the original loan valuation.  It is also hard to believe that prices will rise back up to anywhere near 2005/06 prices any time soon given the grossly inflated prices paid for land at the peak of the market and the present supply of zoned land.  As Sinead Kelly has posted on IAN, land values spiralled upwards in Ireland in the early 2000s, jumping in value from just under €10,000 per hectare in 1998 to over €58,400 per hectare in 2006 (see Figure 1), making Irish land the most expensive in Europe, nearly twice the cost per hectare of any other European country and 3 times greater for all but 4 countries (Spain, N. Ireland, Luxembourg, Netherlands) (see Figure 2).  According to the DEHLG housing stats, in June 2008 there were 14,191 hectares of zoned, serviced housing land in the state that could accommodate 462,709 additional housing units (to put that in perspective, the number of households grew according to the Census by 342,221 between 1996 and 2006), and this doesn’t include other kinds of zoned land.  Which brings us on to the second story.

Figure 1: Irish Land Values 1973-2006 (€ per hectare)

Figure 2: European Land Values by Country (€ per hectare)

The second story concerned the Waterford County Draft Development Plan which went on display on Friday and proposes to rezone 70-90 percent of the 800 hectares zoned in the previous plan, bringing it into line with changed circumstances, projected population growth and national and regional planning guidelines.  According the Irish Times, one of the maps shows ‘large tracts of land, acquired in recent years by developers at astronomical prices, reverting to agricultural use.’  Such rezoning makes a lot of sense and Waterford should be commended for taking the lead, but it also raises a number of questions.  Why was the zoning in the previous plan so excessive (and likewise in other counties)?  Will such rezoning occur in other counties as they formulate their draft development plans?  How much of the rezoned land is projected to be moved into the NAMA portfolio and what are the implications of any rezoning for its projected value?  Will there be political pressure to make sure that it is NAMA land that is kept zoned to maintain some kind of value above agricultural prices?  Clearly the answers to the latter questions will have an impact on the valuations attached to NAMA managed land and need to be factored into any calculation of present and future valuation.

As these two stories illustrate, there are good reasons as to why people are concerned about NAMA and whether it will be able to fulfil its remit.  Already the IMF has noted that it is unlikely that NAMA will get credit moving in the Irish economy.  If the valuations of land and property are wildly inaccurate, and the ‘haircut’ paid by the government is in excess of the true value, then NAMA could be a very expensive exercise that the Irish tax payer will shoulder for years to come.  One can hope that government knows what it is doing, and maybe they can reassure on all the questions above, but one can’t help being worried pending such reassurance.

Rob Kitchin

We’ve all been wondering who among the country’s developers will end up being Nama’d. Now we know some of the names. According to a report by Simon Carswell in Thursday’s Irish Times, some of the debts owed to the banks by the following ten developers will be bought from the banks by Nama on behalf of the (charitable? swindled?) Irish taxpayer: (more…)

Following on the two earlier posts in relation to Irish electoral politics, and its geographical expression, during the post-Celtic Tiger or NAMA era (the second of which proved to be quite similar to an article in last Sunday’s Sunday Tribune), this final piece will move on fron discussions of potential election dates and government prospects to a study of the key electoral battlegrounds that will dot the political landscape in (presumably) Spring 2012 and what the different parties must do to successfully navigate these.

The next general election will be fought on the basis of the new electoral boundaries, as recommended by the 2007 Constituency Commission report and as legally enacted by the 2009 Electoral Act. The scope of the changes involved in this report is not as extensive as those involved in previous boundary reports, with no new constituencies created (although the Limerick/ north Kerry constituencies were renamed), only a handful of constituencies losing (Limerick City, Dún Laoghaire) or gaining (Louth, Dublin West) extra Dáil seats, and territory transfers involving some other constituencies. Although obviously having some impact at the local scale, in national terms these changes should not unduly influence the results of the next general election.

An Irish Times/MRBI opinion poll in January 2010 ranked Fianna Fáil as the third most popular political party in the state, after Fine Gael and the Labour Party, while the local and European elections of June 2009 proved to be the first national elections since the late 1920s in which Fianna Fáil did not emerge as the largest party in terms of votes and seats. In the local elections, Fianna Fáil won over 125,000 fewer votes and 122 fewer council seats than Fine Gael did, but they won over 200,000 more votes and 86 more seats than Labour did. On this basis, while Fianna Fáil currently trail Labour in the opinion polls, the strong likelihood is that they will win more seats than Labour at the next general election. Why? The main reason has to do with the geography of Labour Party support, with very weak levels of support for the party registered across large tracts of the Irish political landscape – in 2007, for instance, Labour contested very constituency in the state but failed to win over 5% of the vote in any of the Connacht-Ulster constituencies (apart from Galway West), as well as Clare, Cork North-West, Laois-Offaly and Meath West. Draw a line between the cities of Dublin and Cork and there are very few pockets of solid Labour Party support to be found – with the notable exceptions of Limerick City, Galway City and the towns of Mullingar, Drogheda, Killarney and Tralee. Hence, prospects of Labour seat gains in these constituencies are limited. The bad news for Fianna Fáil, however, is that although Labour may not pose a serious electoral threat in these western constituencies, the electoral threat from Fine Gael, by contrast, proves to be most potent here – conversely, the eastern constituencies where Fine Gael support is weakest generally tend to be the constituencies where Labour polls strongest.       

Labour Party support by constituency in 2007 General Election

Fine Gael support by constituency in 2007 General Election

The crucial battlegrounds and what the political parties must do

The nature of the Irish multi-member proportional representation by single transferable vote (PR-STV) dictates that all constituencies are marginal, as opposed to first past the post systems which tend to be characterised by a superfluity of predictable, “safe seat”, constituencies. But some of these marginal constituencies are less marginal than others! In some constituencies, while questions still remain as to the personnel to be elected, the destination of seats by political party may prove to be relatively predictable, barring an electoral meltdown for one, or more, parties – in other words, the main competition in these constituencies are likely to be between candidates from the same party. Significant changes in representation appear unlikely at this stage in some constituencies (Clare, Galway East, Laois-Offaly, Waterford, Wexford), and there are other constituencies where the result appears to be relatively predictable (Dublin West – Joe Higgins will probably win the extra seat in this enlarged four seat constituency”. The main competition in other constituencies will likely focus around parties from the “same side of the House”, wherein Fine Gael will fight it out with Labour for the final seat in some constituencies while Fianna Fáil and the Green Party do likewise in other constituencies. The constituencies that will be of especial interest in terms of the national picture, however, are those where the destination of the final seat will involve head-to-head clashes between the main government and opposition parties – the constituencies where Fine Gael and/or Labour stand to make gains at the expense of Fianna Fáil and/or the Green Party, and vice versa. Constituencies that would fall into this category include Cork East, Dublin Central, Dublin Mid West, Dublin North East, Dublin South, Dublin South Central, Kerry North-West Limerick and Sligo-North Leitrim. In addition to these, however, are the five constituencies that I believe could prove to be the most crucial at the next general election: 

• Carlow Kilkenny (5 seats): The government parties could easily lose two seats in this constituency. In 2007, the combined Fine Gael and Labour vote here came to 26,355, or 39.0% of the total vote, yet between them the two parties won as many seats (i.e. one!) as the Green Party did with just 5,386 votes (8.0%). Labour and Fine Gael will both be looking to take the Green Party seat, but the third Fianna Fáil seat in this constituency is also vulnerable. Labour failed to hold a Dáil seat in Carlow-Kilkenny after the 2007 contest – the first time the party had failed to do so in this constituency for 50 years and would be expected to reclaim that seat at the next election, especially after strong local election performances by the party in Carlow and Kilkenny in June 2009. But Fine Gael’s John Paul Phelan came close winning a seat in 2007 and would have a strong chance of taking a second Fine Gael seat. Thus there are strong prospect of the government parties shedding two seats to the opposition parties here. 
• Cork South Central (5 seats): Despite combining to enter government after the last general election, both Fianna Fáil and the Green Party lost seats to Fine Gael and Labour in this constituency in 2007. As opposed to the other examples, this is a constituency where the government parties must be the ones looking to gain seats if they are to enjoy any prospect of retaining power after 2012. A reversal of the 2007 result would amount to a net gain of two seats by the government parties, but such a result looks highly unlikely at this stage.         
• Dublin North (4 seats): Between them, Fianna Fáil and the Green Party have won roughly 60 per cent of the vote and three out of the four seats on offer in this constituency in the last three general elections. With this constituency having ceded significant amounts of territory to neighbouring Dublin West and Dublin North West in the 2007 Constituency Commission report, this constituency will be very unpredictable, but the second Fianna Fáil and/or the Green Party seat must be viewed as vulnerable to a gain by Labour and/or Clare Daly of the Socialist Party.    
• Dublin South East (4 seats): Traditionally, Dublin South East and Dún Laoghaire (see below) tend to be included amongst the most volatile constituencies in the state – if there is a national swing towards/against a party in an election then this will tend to assume tidal proportions in these constituencies. This has traditionally tended to be one of Fianna Fáil’s weakest constituencies, but the party won almost one and a half quotas here in 2007 and, barring a total electoral disaster, should probably hold this in 2012. The vulnerable government seat is that of John Gormley, the current Minister for the Environment, especially given that he only narrowly retained this seat in the 2007 election. However, should Gormley retain his seat, or should his seat be won instead by Fianna Fáil, then a Fine Gael-Labour government after this election might not prove to be as certain as has been expected. The destination of the votes that former PD leader, Michael McDowell, won here in 2007 could ultimately prove decisive in this contest, but a very strong showing in the local elections by Labour might suggest a gain for that party.
• Dún Laoghaire (4 seats): As well as being one of the most volatile constituencies in the state, Dún Laoghaire lost a seat in the 2007 Constituency Commission boundary revisions, meaning that at least one of the five current incumbents will lose their seat in 2012. Of these, the most likely victim is Ciarán Cuffe, who currently holds what is probably the most vulnerable of the six Green Party seats. In 2007, Cuffe won the last seat in the constituency despite winning less than half of a quota and he proved to be highly dependent on Fine Gael and Labour transfers. With these transfers likely to dry up somewhat in 2012 and with the percentage share of the vote needed to reach the quota increased from 16⅔% to 20%, one could feel almost safe in betting a house on Cuffe failing to retain his seat in 2012: it would be an exceptional achievement if he were to hold his seat, even in slightly less unpromising times for the government parties. But given the volatility of this constituency, a national swing against Fianna Fáil would leave at least one of their two seats here vulnerable, either to a resurgent Fine Gael or Labour or to Richard Boyd Barrett of the People Before Profit alliance.             

I will conclude by addressing the challenges and issues facing all of the major political parties in the lead up to the next general election, while also identifying the constituencies that I believe they

(i) must gain seats in – in order to attain/retain power or at least achieve an acceptable electoral result,

(ii) could gain extra seats for the party – on a very good day for that party,

(iii) are likely, or could possibly, to lose seats in – constituencies that the party could easily lose seats in, barring a good election result for that party, but could still manage to retain/gain power or achieve a respectable electoral showing, despite such losses,

(iv) could lose seats in, but must not lose seats in  – otherwise prospects are bleak for that party winning power or at least achieving a respectable electoral showing.    

For Fianna Fáil, party discipline is essential in terms of maximising the party’s number of seats. In the last three elections, even though the party’s support levels have proved to be relatively low in historical terms, Fianna Fáil came relatively close to winning almost half of the Dáil seats on offer. A more centralised and professional approach to candidate selection, in addition to effective vote management strategies, allowed the party to maximise the amount of seats won relative to their share of the national vote. If this party discipline collapses in the face of individual TDs/candidates’ fears that government unpopularity will threaten their own seats then a decline in Fianna Fáil support levels could translate into an even more catastrophic decline in their representation levels, akin to what happened to the party in the 1992 election, or what happened to Fine Gael in 2002.    

Must gain extra seats in: Louth, Dublin North East, Roscommon-South Leitrim

Could gain extra seats in: Cork South Central, Wicklow

Likely/possible seat losses: Cavan-Monaghan, Dublin South Central, Dublin Central, Kildare North, Tipperary South

Must not lose seats in: Carlow-Kilkenny, Cork East, Donegal North East, Donegal South West, Dublin North, Dublin North West, Dublin South (relative to 2007 level), Dublin South East, Dublin South West, Galway West, Kerry North-West Limerick, Kildare South, Limerick City, Limerick, Mayo, Meath East, Sligo-North Leitrim,

The challenge for Fine Gael is to probably become more Fianna Fáil than Fianna Fáil themselves; in other words to surpass their main rivals in terms of party and campaign organisation to a degree that sufficient seats are won in 2012 for a Fine Gael-led government to be formed, or even to allow Fine Gael surpass Fianna Fáil and emerge as the largest party in the state. The party lost out on seats to Fianna Fáil in some constituencies in 2007 (Carlow-Kilkenny, Louth, Sligo-Leitrim) due to poor vote management, although there were instances of exceptional vote management in other constituencies (Roscommon-South Leitrim) – greater consistency across all constituencies is required at the next election. Ultimately, the post-election bargaining with the Labour Party could play an equally important role in determining the party’s chances of winning power.   

Must gain extra seats in: Carlow-Kilkenny, Cavan-Monaghan, Dublin Central, Kildare South

Could gain extra seats in: Cork East, Cork North West, Dublin South East, Dún Laoghaire, Galway West, Limerick, Mayo, Sligo-North Leitrim,  

Likely/possible seat losses: Limerick City, Roscommon-South Leitrim, Wicklow

Must not lose seats in: Cork South Central, Dublin North East, Tipperary North

For Labour candidate selection will be vital in determining the party’s ability to transfer anticipated increases in support levels into significant seat gains. For instance, the party needs to avoid a scenario whereby potential seats gains are lost due to not running enough candidates, as happened with constituencies such as Dublin North and Dublin South in the “Spring-tide” election of 1992. Excluding those constituencies where a Labour seat is viewed as vulnerable (e.g. Dublin North East, Kildare South), the party must give strong consideration to running more than one candidate in their stronger constituencies (and possibly three in a constituency such as Dublin South Central). Outside of the party’s stronger areas in Dublin and eastern Ireland a different challenged is posed, wherein the party must compensate for a limited natural support base by looking to draw in other left-leaning candidates, who have built up significant personal support bases in these areas, either from the independent ranks (e.g. Luke Flanagan in Roscommon-South Leitrim), from small socialist parties (e.g. Seamus Healy in Tipperary South), or even from other parties such as Sinn Féin (e.g. Brian Stanley in Laois-Offaly).

Must gain extra seats in: Carlow-Kilkenny, Dublin North, Dublin South Central, Dublin South, Kerry North-West Limerick, Meath East   

Could gain extra seats in: Dublin South Central (second gain), Dublin South East, Kerry South, Tipperary North, Tipperary South, Wicklow

Likely/possible seat losses:  Limerick City

Must not lose seats in: Cork East, Cork South Central, Dublin North East, Kildare South

The next general election for The Green Party may ultimately be about survival as a very real prospect exists that the party could lose all their seats in Dáil Éireann. While there are prospects of seat gains for the party in constituencies such as Cork South Central (where Dan Boyle won a seat in 2002), Louth and Galway West, given the current political context the real challenge for the party will be to try to hold as many of the current Dáil seats as possible. At this stage, the party looks likely to lose its seats in Carlow-Kilkenny and Dún Laoghaire, and faces a huge struggle to retain the seats in Dublin Mid West and Dublin South East. The key battlegrounds may prove to be Dublin North and Dublin South, the constituencies that the party’s prospects of holding their seats are strongest in. 

Must gain extra seats in: Not applicable

Could gain extra seats in: Cork South Central, Louth

Likely/possible seat losses: Carlow-Kilkenny, Dún Laoghaire,

Must not lose seats in: Dublin South, Dublin North

For Sinn Féin prospects for the next general election appear to be decidedly mixed at this stage. A series of defections and disappointing electoral results in recent years has weakened the party’s standing in the Dublin region, as well as in certain parts of the state such as Wexford, but against that the party made significant gains in the 2009 local elections in other parts of the state such as Cork City, Limerick City and Wicklow and the party also has a strong chance of recording its first ever victory in a by-election in the Republic of Ireland when the Donegal South West contest takes place later this year. The party suffers from a rather unfortunate geography of support in that many of its stronger constituencies tend to be three-seat constituencies, which tend to be more difficult for smaller parties, such as Sinn Féin, to win given the higher percentage of the vote required to reach the quota. The challenge for Sinn Féin at the next general election will be to try and regain the momentum that the party had in the earlier 2000s; to redress the party’s problems and declining fortunes in Dublin and to turn potential gains into real gains in target areas such as the two Donegal constituencies. 

Must gain extra seats in: Donegal South West, Donegal North East, Dublin South West

Could gain extra seats in: Dublin Central, Dublin North East, Dublin North West

Likely/possible seat losses: Kerry North-West Limerick, Dublin South Central

Must not lose seats in: Louth

Adrian Kavanagh

That’s the conclusion of Retail Ireland, as reported in the Irish Times last week on the back of the CSO’s Retail Sales Index figures.  The CSO report that the volume of retail sales decreased by 14.1% in 2009 when compared to 2008 and decreased by 18.0% in value terms.  This was on top of a drop of volume of retail sales of 6.1% and in value of 4.5% in 2008 compared to 2007.  All retail sectors showed a decline with the most significant year on year fall in the motor trade with volume of sales down 15.1% (20.1% in value terms), with non-specialised stores (includes supermarkets) down 3.5% (9.2% in value terms).  All the indication from pundits is that the volume and value of retail sales will continue to fall in 2010, not unsurprisingly given the tightening of purse strings across the country as more and more people join the Live Register, the cuts to public sector take home pay, and most people becoming more cautious, saving rather than spending.

The worry is that we become firmly stuck in a deflationary spiral where as spending contracts, retailers and their suppliers come under pressure and start to let staff go or shut up shop, which then adds to the number of people tightening purse strings, which reduces demand and spend, and so the circle goes round.  Moreover, in this scenario it is likely that indigenous shops and producers will suffer the most, unable to compete with the bigger (overseas) chains who will potentially suck more capital out of the Irish economy.  Retail Ireland is seeking a 10%  rebate on commercial rates paid in 2009, a reduction in VAT for a specific period to stimulate sales, and government intervention in the rental market, service costs and labour rates.  This may seemingly help them in the short term, but what’s really needed is a shift to stimulate the wider economy and to create employment that will put money back in peoples’ pockets and will help breed consumer confidence to start spending again.