Why 2018 will be a challenging year for Ireland

What lies ahead of Ireland in 2018? iStock

What will the year 2018 bring for Ireland? An abortion referendum? A presidential election?

Another year over, a new one just begun, as the great John Lennon used to sing.

As the Christmas and New Year celebrations fade in Ireland and we make our resolutions and look forward to what lies ahead, one thing is clear: 2018 is going to be a challenging year.It's not the economy, however. That is powering ahead, with a growth rate for 2018 forecast at between four and five percent, double the rate expected in the rest of Europe.

In fact, the Irish economy is growing so fast that the Minister for Finance Paschal Donohoe and leading economists are warning that we need to be careful in case it overheats. We do not want to create another bubble like the one that led to the crash here a decade ago.

Unemployment here is expected to fall again in 2018 to just five per cent, which is getting close to the four percent level regarded as full employment by economists (this takes account of people who are temporarily out of work, changing jobs, etc.) And with other resources in the economy as well as labor being stretched to the limit, stoking things up further can only lead to inflation and higher prices.

So the government is already warning that the promised extra state spending and tax cuts we were promised in 2018 will have to be moderated. There is also the overriding reality that we are still one of the most indebted nations on earth after the bailout, so the prudent thing would be to use any spare funds we have in 2018 to pay down even a small fraction of our national debt.

Or at least to put it aside for rainy days that may lie ahead.That is the economic background as we head into 2018, just eight years after the country was on its knees and was rescued by the bailout from the IMF and the EU. It's an encouraging picture but one that could quickly change as the year ahead unfolds.

Much will depend on how Brexit goes and on the effect of the Trump tax changes on American investment here. If either of those goes badly for us then we could be hit by a deluge rather than just a few rainy days.

Will Trump have an effect on Ireland in 2018? Image: WikiCommons.

Beyond the economy there are several challenges ahead for the Taoiseach Leo Varadkar, who took over from Enda Kenny in 2017. There is Brexit, of course, which overshadows everything else, but there will also be a referendum on abortion, a papal visit, a possible general election, a possible presidential election, and a continuing housing crisis. What could possibly go wrong?

The forthcoming year will see the Brexit negotiations between the U.K. and the EU finally get down to the serious business of negotiating their future trading relationship. The phony war up to now about the preconditions for these negotiations is going to look like a storm in a cup of British tea when they get down to the nitty gritty of trade.

Making this worse will be the limited time left to sort out what will be incredibly complex issues before the U.K. leaves the EU in March 2019. And the danger from our point of view is that the more fraught the negotiations become, the more likely the bothersome Irish border issue will slide down the agenda and be forgotten.Of course the EU is fully behind us now, vocally supporting our stance that there can be no return to a hard border in Ireland. That gives us hope for the future.

But words are easy and action to back them up will be far more difficult. The EU leaders at their recent summit agreed a formula of words on the Irish border issue that was really a fudge, an attempt to gloss over how hard it will be to solve this conundrum when it comes to decision time.

Will Brexit cause the same difficulties in 2018? Image: iStock.

As we have pointed out here before, it is simply not possible for the U.K. (including Northern Ireland) to be outside the EU Single Market and Customs Union without there being a hard border in Ireland. A hard border involving control of both goods and people crossing the border will be the reality unless the British modify their position so much that they will effectively still be in the EU in all but name. And that does not look likely at present.

No one doubts that the other EU countries are sincere in their support for the Irish position. But there are hundreds of billions in trade every year in both directions between the U.K. and the other big countries in the EU at stake here. When the negotiations get hot and heavy later this year and thousands of jobs and billions in trade are on the line among the big EU players, the pressure will be on Ireland, a minnow in the EU sea, to make the best of whatever solution is agreed.

On the domestic political front, the biggest challenge will be the abortion referendum in the summer. There is a mistaken belief that because we now have a mixed-race Taoiseach, who also happens to be gay, the country has fundamentally changed. This belief comes partly from the euphoria that followed the referendum in 2015 which legalized same sex marriage here. But it's not as simple as that. Abortion is a far more difficult issue for many voters here, particularly older voters.

The abortion debate is sure to step up in 2018. Image: RollingNews.ie.

And it is important to remember that this will be decided by the majority of voters in the middle, not by the pro-life or pro-choice absolutists at either end. The debate will be emotive and nasty, even more than it was when the amendment prohibiting abortion was put into the Constitution back in the 1980s - and it was extremely bitter and dirty then.

It's likely to be far worse this time because the argument will be about the actual introduction of abortion rather than a constitutional amendment to stop a future government introducing abortion at a time when abortion was illegal anyway. A Dáil committee on the issue has recommended the introduction of legal abortion on demand up to 12 weeks, which will be a starting point for the debate.

Irish Minister for Health Simon Harris. Image: RollingNews.ie.

We have yet to see what the government will propose. But the fact that the Minister for Health Simon Harris is in favor and the Minister for Foreign Affairs Simon Coveney is against is an early indication of the divisions that lie ahead.As we said, this debate will be toxic and angry and there is no guarantee that the Repeal the Eighth Amendment campaign will win. The visit to Ireland by the Pope next August will add an extra dimension.

A papal visit and a referendum on abortion possibly within weeks of each other. Now that's going to be interesting!All of this could be complicated even more by a snap general election this year. If Varadkar's recent good showing in the opinion polls strengthens in the months ahead he might be tempted to go to the country to get his own mandate before the gloss wears off his shiny new image.

It's unlikely, but it's possible. If there is an election, Fine Gael would probably end up leading another minority government, so it hardly seems worth the risk.There is also the widespread dissatisfaction over the housing crisis to consider, the blame for which is being heaped on the government's alleged inept handling of the issue. This is unfair since the shortage of housing is a legacy of the crash and there is no instant solution to the problem.

The housing crisis will remain a top story in 2018. Image: RollingNews.ie.

Opposition politicians, mainly of the radical chic variety, have been demanding a return to mass social housing construction on a scale similar to that carried out 60 or 70 years ago when the Dublin slums were being cleared. But even if we had the funds and the labor to do it (which we don't), Dublin and Ireland are very different in 2018.

The solution today, with the very different family make-up and social structure we have now, will require a more varied approach and will also involve the private sector as the revival of the construction sector gathers pace. The main driver of the present level of homelessness is soaring rents in the private sector, a situation that will right itself when a sufficient supply of housing is built in the coming years. Eventually house prices, and rents, will stabilize.

In the meantime, the duty of government is to provide enough emergency accommodation for those who are priced out of the rental market. That is being done but it's not the long term solution. The reality is that this year will see only a marginal improvement in the housing situation and the issue will be used to attack the government at every opportunity, particularly if there is an election.

In the middle of all this weighty stuff in 2018 we will be glad of some light entertainment, which may come in the form of a presidential election. Michael D. Higgins reaches the end of his seven-year term in November and seems to want to continue despite having promised to be a one term president before he was elected.

Will Michael D. Higgins take the decision to run again?

He has yet to confirm this, but all the signs are that he has grown so accustomed to the grandeur of the office he will be very reluctant to give it up. And of course he would miss the pulpit it gives him to lecture not only us at home about our shortcomings but the rest of the world with his philosophical meanderings on the issues of the day.

John Lennon's “So This Is Christmas” may have been similarly simplistic in its plea for an end to fear, war and poverty, but that's the nature of even the great pop songs and at least we can sing along.

What do you think lies ahead of Ireland in 2018?