Government faces its greatest challenge to its shaky internal equilibrium in coming months

The siege and fall of Robert Troy jolted politics out of its summer torpor just as the holidays came to an end. From next week the machinery of Government will begin creaking and clanking into gear as Ministers and senior officials prepare for the first post-holiday Cabinet meeting on Wednesday morning, while the laborious process that normally produces the budget over two months will be squeezed, concertina-like, into the next four weeks. Knuckle down, everyone: school’s back.

Three overarching themes are likely to dominate politics in the coming term. The first is the domestic agenda, dominated by cost-of-living pressures and the Government’s response to them in the budget. Expect a large giveaway budget on September 27th, fuelled by strong economic growth, record employment and bulging corporation tax receipts. The urging of the Fiscal Advisory Council for prudence — lately intoned by its chairman Sebastian Barnes in The Irish Times on Thursday — will not go unheard, but it will form only one part of the budget cacophony. And nearly all the other voices will be calling for — demanding, actually — higher spending. Sure hasn’t Minister for Finance Paschal Donohoe got the money? And when he has it, shouldn’t he spend it? What can possibly go wrong with that plan?

[ Troy’s biggest mistake was being unable to see that owning one property is a privilege — never mind 11 ]

[ Budget spending must be firmly anchored in growth and tax revenue ]

Also expect a spirited effort by Donohoe and Minister for Public Expenditure Michael McGrath to limit the hikes to current expenditure in the coming weeks. There is certainly growing alarm in the Department of Finance that the “once-off” measures promised to deal with the effects of inflation will turn into an annual treat. “How many times can something be once-off?” asks one insider. But ultimately the political imperative to increase public spending and welfare payments will have its way.

But however big the budget-day package, it will mitigate only partially the additional costs that all households are facing. The Government should focus its financial firepower on those who need it most, but in the Irish system, everyone has to get something, so nobody gets much. The budget package will be greeted by howls that the Government has not done enough.

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Rising costs will find special expression in two other issues. Even though house prices are showing signs of stabilising, spiralling rents and a shortage of student accommodation will cause extreme hardship in the coming months.

Meanwhile, the Government will make another effort to avoid public sector strikes with an improved pay offer, possibly next week. The unions have already turned up their noses at 5 per cent over this year and next (plus the 1 per cent due in October), and while the Government has indicated it will go further, it won’t go all that much further. Additional money for public servants means less money for other purposes — though you tend not to hear too much about that when the matter is discussed on the airwaves.

The second part of the trifecta of tribulations is the international challenges facing the Government. During the early part of the summer, I spoke to several senior Government sources about the prospects for the leadership of the British Conservative Party. The consensus was clear: anyone but Liz Truss. Well, here we go. Truss has made it clear that she will relish a fight with the European Union over the Northern Ireland protocol, with her campaign suggesting yesterday that she may trigger article 16, the treaty provision that allows her to set aside parts of the protocol. This will begin a new phase in EU-UK tensions. The bottom line is that the EU will give Truss a fight and a trade war if she really wants it. If that happens, Ireland will be caught in the middle.

[ Truss warns EU she is willing to trigger article 16 of NI protocol ]

This renewal of hostilities, with all the brainless Westminster rhetoric that accompanies it (Truss said this week that the “jury’s out” on whether French president Emmanuel Macron was a “friend or foe”), will exacerbate tensions in Northern Ireland, as the end-of-October deadline to revive the Stormont institutions looms.

If the premiership of Boris Johnson was marked by a drastic deterioration in Anglo-Irish relations, things are not likely to get any better with Truss in Downing Street. And they may well get worse.

The third theme likely to dominate politics in the coming months will be the preparations, jockeying and politicking in advance of the historic switchover in the Taoiseach’s office in mid-December, when Leo Varadkar takes over from Micheál Martin

This will be the greatest challenge to the Government’s sometimes shaky internal equilibrium so far. Both the leaders of Fine Gael and Fianna Fáil will face the challenge of reshuffles, events which always — always — cause political trouble. They will also have to contend with the need to keep focused on governing and addressing the difficulties people are facing, while simultaneously managing the transition. The public will not approve of politicians transfixed by the prospect of jobs for themselves while they are struggling to pay the bills. Not alone has this never been done before, it will be done at a time of immense external pressure on the Coalition. And pressure, politically and geologically, tends to cause cracks.

In its first two years, the Coalition has had mixed success in defining and pursuing a set of common political goals. During the first half of its existence, its leader was of the view that the parties which make it up would succeed or fail together. Of course, his period in charge will not end with an election that tests that view. His successor will not have that luxury and may have a different analysis.

There are certainly many people in Fine Gael and in Fianna Fáil who believe that when it comes to the judgment of voters, one of the parties will win, and one will lose. If that view takes hold at the top, it is hard to see how the Coalition holds together.