DUBLIN, Jan 15 (Reuters) - Talks between Ireland's two historically dominant center-right parties and independent lawmakers have resulted in an agreement that will provide a "comfortable majority" for a new coalition government, a negotiator for one of the parties announced on Wednesday.
Fianna Fail and Fine Gael, who were at the helm of the previous coalition, have been engaged in discussions since they fell short by one seat, with 87 required for governing. The new arrangement aims to sustain their prior policy of high spending.
The parties aimed to finalize the agreement before the impending inauguration of the U.S. President-elect next week, considering his proposals to reduce corporate tax and implement tariffs, which could pose a threat to Ireland's economy reliant on foreign multinationals.
"We now have a group of nine independents... bringing our total to 95, providing us with a comfortable majority," disclosed Fianna Fail legislator James Lawless, one of the party's negotiators, on RTE radio.
The fresh policy agenda is scheduled for release later on Wednesday.
The strategies will involve a commitment to lower the VAT rate from 13.5% to 9% for food and catering service businesses, some struggling due to escalating costs, as another Fianna Fail negotiator, James Browne, shared with RTE.
Ireland's finance ministry estimated last year that such an adjustment would result in an annual cost of 545 million euros, deeming it "unjustified." The rate had previously been temporarily lowered for the entire hospitality sector, with the last reduction expiring in 2023.
The previous coalition presented a 10.5 billion euro ($10.7 billion) budget boosting tax cuts and spending, supported by a rise in revenues from foreign multinational corporate taxes, positioning Ireland as a leader in Europe.
Although the finance ministry anticipates continued growth in these revenues, ensuring five more years of robust budget surpluses, officials have consistently cautioned that these could diminish and turn challenging if Trump proceeds with his tariff proposals.
Fianna Fail's leader Micheal Martin is anticipated to resume as prime minister for a second term when parliament convenes on Jan. 22, having previously led the country from 2020 to 2022, and is set to rotate the role with outgoing premier Simon Harris of Fine Gael.
Fine Gael's Paschal Donohoe, chair of the euro zone finance ministers, is likely to return as the finance minister.