Insights on key developments of the week
If anyone needed a reminder of how quickly politics can move, this week provided it. On Tuesday, Morning Ireland abandoned its planned running order when the Irish Independent’s Ireland Editor, Fionnán Sheahan, revealed that Finance Minister Paschal Donohoe was stepping down for pastures new. It wasn’t the prospect of a senior international role that surprised seasoned Oireachtas observers, but the timing – coming less than a year after his re-election for a fourth successive term as TD for Dublin Central.
Within six hours, the political landscape had shifted again, as it inevitably does. Three new cabinet ministers were appointed, alongside a new super junior minister and a new minister of state, all from the Fine Gael ranks. Notably, Harris ally Helen McEntee became Ireland’s first female Minister for Foreign Affairs and Defence.
The centre ground – and Fine Gael in particular – has lost a political heavyweight in Donohoe. With Simon Harris now holding the Finance brief, the coalition will take on a different complexion, most clearly reflected in the decision-making dynamic at the heart of Government. Up until Tuesday, many key decisions were taken jointly at meetings attended by the Taoiseach, Tánaiste, Minister for Finance and the Minister for Public Expenditure.
We may be seeing a return to a more concentrated power structure between the Taoiseach and Tánaiste/Minister for Finance. It’s not a new model, but it has been some time since it featured so prominently in Irish politics, perhaps not since the Bertie Ahern–Brian Cowen era.
But moving from a power structure of 4 to 2 inevitably has a loser. Minister for Public Expenditure and Infrastructure Jack Chambers will require heightened political awareness – and sharp elbows.
Politics always moves on, and this week has been a vivid reminder.
Political Update
Donohoe Resigns as Finance Minister to Take Senior World Bank Role
Minister for Finance Paschal Donohoe has this week resigned from Government and announced his departure from Irish public life to take up the role of Managing Director and Chief Knowledge Officer at the World Bank, the institution’s second most senior post, and step down as Eurogroup chair, triggering a by-election in the constituency he has represented since 2011.
In response, Taoiseach Micheál Martin has confirmed a significant Cabinet reshuffle. Tánaiste and Fine Gael leader Simon Harris will assume the Finance portfolio; Hildegarde Naughton will move into Cabinet as Minister for Education and Youth; and Helen McEntee will take on the Foreign Affairs and Defence brief. Both the Taoiseach and Mr Harris led tributes in the Dáil, highlighting Donohoe’s international reputation, his role in strengthening Ireland’s fiscal position and his record of relationship-building across Europe.
Reflecting on his two decades in public life, Donohoe described his time as Minister and TD as one of his greatest honours. He said that, in each of his roles, his objective had been to “build a better and fairer Ireland through careful management of our economy and public finances,” signalling a clear closing chapter to a long-standing political career as he transitions to the global stage.
Economic Update
Commission Flags Exceptional but Volatile Growth as Export Front-Loading Distorts Irish Figures
The European Commission has projected that the Irish economy will “grow exceptionally” in 2025, with GDP forecast to expand by 10.7%, far outpacing the euro area average of 1.3%. The surge is driven largely by a sharp increase in exports to the US, particularly in pharmaceuticals, as firms front-load shipments ahead of new US tariffs. Between January and May, goods exports to the US rose by 153% to €71 billion, pushing real GDP up by 18.5% in the first half of the year. The Commission also notes that the underlying domestic economy remains solid, supported by resilient private consumption and continued growth in modified investment.
However, Brussels has stressed that this performance is highly atypical and will not be sustained. As the front-loading effect unwinds, growth is expected to fall back sharply to just 0.2% in 2026, before stabilising at around 2.9% in 2027. A recent EU–US trade agreement has eased some tariff-related uncertainty and the overall impact of US measures on Irish exports is now expected to be limited, with core pharmaceutical exports not currently subject to the new tariffs.
On the public finances, Ireland is forecast to record a budget surplus of 1.5%, underpinned by buoyant corporate tax receipts. From 2026, corporation tax revenues are set to be boosted by an estimated €3 billion annually as the new domestic top-up tax brings large multinationals up to a 15% effective rate.
Sustainability Update
Robinson Warns COP30 Will Be Judged on Fossil Fuel Phase-Out Commitment
Former president Mary Robinson has warned that the COP30 climate summit in Brazil will be judged on whether it delivers a clear commitment to phasing out fossil fuels.
Speaking in Belém, she said that “everyone knows” this step is necessary but pointed to the strong presence of the fossil fuel lobby at the talks, accusing it of seeking to undermine the work of the IPCC. She contrasted this influence with the lack of tangible progress since COP28, noting that despite last year’s pledge to “transition away” from fossil fuels, analysis published during COP30 shows oil and gas use continuing to rise.
Robinson said she had not yet seen sufficient ambition from negotiators and urged ministers arriving for the final phase of the summit to act together for the common good. While acknowledging Brazil’s own contradictions, including recent licences for oil exploration in the Amazon, she argued that President Lula had set an important tone with a strong opening address focused on ending fossil fuels and protecting the rainforest, and called on other countries to back his stance. She also proposed an “ethical stock-take” in the coming years to consider where global climate policy would go if it were not constrained by economic crises and short-term populist politics, suggesting that under such conditions the world would “of course go in the right direction”.
Robinson is attending COP30 on behalf of The Elders and her Project Dandelion initiative and shared a platform at the event with former Colombian president and Nobel laureate Juan Manuel Santos.
Keith Hoare, Managing Director, Public Affairs