Politics

London investors told Sinn Féin-led government would be ‘more New Labour than Corbyn Labour’

Group put together by Davy to meet finance spokesman Pearse Doherty included investors in government bonds, Irish banks and other businesses here

Sinn Féin finance spokesman Pearse Doherty. Photograph: Brian Lawless/PA Wire

Pat Leahy
Tue May 7 2024 - 06:00

“More New Labour than Corbyn Labour” was the verdict of stockbroker Davy on the likely economic policy of a government led by Sinn Féin following a briefing for investors recently in London.

The contents of the briefing were summarised in a note, seen by The Irish Times, circulated by the investment firm to clients after the meeting.

Davy’s view should reassure some investors about the economic policies that would likely be implemented by a Sinn Féin-led government. While the stockbroker notes that the party would implement higher income taxes on those earning more than €140,000 a year, it said Sinn Féin does not plan to fundamentally change Ireland’s economic policy.

In a summary Davy says Sinn Féin “recognises the key strengths of the Irish economy and the need to maintain policies to support key growth drivers”.

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It says that Sinn Féin “advocates maintaining the status quo on excess corporate tax receipts” (although the party voted against the establishment of the sovereign wealth funds designed to save the windfall corporation tax receipts of recent years, it says it is supportive of the principle).

“Its housing policy,” says Davy, “points to a greater State role while also recognising the importance of market participants in delivery of targets.”

It notes differences with the current Government on banking as Sinn Féin has promised to retain State ownership of AIB, maintain the banking levy and change tax rules.

“Overall,” the Davy note concludes, “Sinn Féin’s approach from an economic standpoint is more ‘New Labour’ than ‘Corbyn Labour’.”

New Labour policy under Tony Blair was characterised by a pro-business and pro-enterprise approach and a “small-c” conservative approach to the economy. It coincided with a period of strong economic growth in the UK, allowing the government to increase the resources available for public spending, especially in healthcare and education.

Famously, Peter Mandelson, one of the architects of New Labour, remarked that the party was “intensely relaxed about people getting filthy rich as long as they pay their taxes”.

Former Labour Party leader Jeremy Corbyn during a pro-Palestine march in central London. Photograph: Jordan Pettitt/PA Wire

Under Jeremy Corbyn the party promised a much more radical outlook. Despite growing the party’s membership and activist base, Corbyn lost the 2017 general election narrowly to Theresa May’s Conservatives and was routed in 2019 when Boris Johnson was Tory leader. Blair, by contrast, won three general elections in a row, a feat never managed previously by the Labour Party.

The lesson has not been lost on Sinn Féin, it seems. The party has been on a campaign to reassure business and investors that it would not interfere with the fundamentals of the Irish economic model should it come to power after the next general election.

Sinn Féin has quietly been meeting business groups and investors, while leader Mary Lou McDonald travelled to Silicon Valley in California last year to meet the tech giants who play such an outsized role in Ireland’s economy – and whose corporation tax billions fund much public spending here.

It is understood that the group put together by Davy to meet Sinn Féin finance spokesman Pearse Doherty included investors in government bonds, Irish banks and other businesses here.

Although seeking to reassure the investors that Sinn Féin would not upend the Irish economic model, Doherty said the party would proceed with a 3 per cent “solidarity tax” on incomes of more than €140,000. However, he said that the party’s preference for a wealth tax of 1 per cent on net assets greater than €1 million would need to be assessed by an expert taxation group to establish its effectiveness.

He said that Sinn Féin would “talk to all parties” in what he admitted could be a protracted period of negotiations on government formation after the election.

Sinn Féin leader Mary Lou McDonald at the launch of the party's local and European elections campaign in Dublin last month. Photograph: Tom Honan

Summarising Doherty’s views, Davy noted: “The primary objective of Sinn Féin is to form a left government. Based on current polling, however, this isn’t realistic and Sinn Féin stressed that it is open to enter government with any party.

“When asked about FG and FF ruling out forming a government with Sinn Féin (formally or informally), Pearse Doherty referred to FG and FF both refusing to enter government with each other previously only for the political goalposts to shift when it mattered.

“There may be a protracted period of negotiations, but Sinn Féin’s view is that the electorate wants change and that failure to try to form a government (by any party) would ultimately be punished if fresh elections are required.”

Doherty also told the London group to expect a referendum on a united Ireland in this decade. However, he said governments “should not act prematurely”, the Davy note said.

Pat Leahy

Pat Leahy

Pat Leahy is Political Editor of The Irish Times

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