Failure to form a government soon will hurt Ireland's economy

A leading stockbroking firm says that the current power vacuum is dangerous for Irish business

Failure to form a government soon will hurt Ireland's economy

Shawn Pogatchnik / AP

Goodbody Stockbrokers has warned that the failure of Ireland's political parties to form a government could jeopardise Ireland's economic recovery.

The report says that record-low levels of public investment will start to have a negative impact on the Irish economy.

"A vacuum exists when important policy initiatives in the areas of housing, infrastructure and health need to be addressed," Goodbody chief economist Dermot O’Leary said.

"The longer the policy vacuum continues, the bigger the risks get," Goodbody warns.

Over five weeks after Irish voters took to the polls, the economy is yet to be affected by the failure of Ireland's political parties to form a Government. Consumption figures for the first quarter of 2016 are expected to return to the highest values recorded during the Celtic Tiger years.

Mr O'Leary suggests that a minority government led by Fine Gael is now more likely than a grand coalition between Fine Gael and Fianna Fáil.

He adds that regardless of the outcome of the negotiations, "any radical shift away from the policies of recent years is highly unlikely."

Micheál Martin and Enda Kenny were twice in contact via telephone calls and text messages last week, but full talks between the two parties will not take place until after the next vote for Taoiseach on Wednesday afternoon.

Fine Gael and Fianna Fáil will both meet with independents ahead of the vote.