The bombshell news that Paschal Donohoe was stepping down as Minister for Finance for a new job at the World Bank represents the departure of a central figure in successive governments.
The Fine Gael TD played a key role in the two most important economic departments – Finance and Public Expenditure – over 10 budgets. The relationships he forged within senior Fianna Fáil colleagues in those ministerial portfolios brought stability to two coalitions between old Civil War parties.
So, what does his departure mean for the Coalition, the economy, Fine Gael leader Simon Harris – who takes over as Minister for Finance – and for Fine Gael itself?
There was strong co-operation between the Coalition parties as Mr Donohoe swapped roles with Fianna Fáil’s Michael McGrath and Jack Chambers in the two economic departments. Party figures expect that to continue with Mr Harris and Mr Chambers running the economic show.
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In the Dáil, Mr Harris has signalled his commitment to working with Mr Chambers – the Minister for Public Expenditure – to “steer Ireland’s economic policy”, invest in infrastructure, increase housing supply and “wisely manage our resources to deliver better public services”.
Colleagues, past and present, expect continuity despite the personnel change.
Fine Gael Minister for Agriculture Martin Heydon told The Irish Times “you expect there to be tensions and some disagreements” within the Coalition, but “by and large, we work collectively for the common good”.
Mr Harris has “always proved himself to be able to work with different Coalition partners”, he said.
Seán Fleming, a Fianna Fáil TD and former minister of state at the Department of Finance, said Mr Donohoe was “totally supportive as a senior minister” when he worked with him and was a “steady, calm influence” who “will be missed”.
“The dynamic between the two party leaders is by far the most important relationship in the Government and once that’s good and strong, everything else falls into line,” he said.
Prof Theresa Reidy, a political scientist who lectures at University College Cork, said the Government was reasonably stable and it is not unusual to have personnel change.
“I don’t necessarily think that has to mean the Government comes unstuck,” she said.
Prof Reidy said in taking on the Finance brief, Mr Harris, who is also Tánaiste, has “put himself right at the centre of all decision making”.
Paschal Donohoe’s last interview
Ossian Smyth, a former Green minster in the Department of Public Expenditure throughout the last Government, praised Mr Donohoe and said the Coalition would be “shocked to lose him”.
He said he expected the Tánaiste to be “extremely busy” as Minister for Finance.
“How is Simon Harris going to do that at the same time as running Fine Gael?” he asked, suggesting Mr Harris would be “overstretched”.
Fine Gael Minister of State Neale Richmond – another Department of Finance alumnus – counters this. He pointed to Mr Harris’s record as a former taoiseach and current Tánaiste, adding that he has run the Departments of Foreign Affairs and Defence at a time of “very serious geopolitical crisis”.
He has “every faith and confidence” that Mr Harris would be “able to fully carry out his duties” as Minister for Finance alongside his other roles.
There has been some criticism of recent budgets by fiscal watchdogs and economists over the level of increase in public spending in recent years.
Speaking on the Inside Politics podcast this week, Mr Donohoe described an environment whereby he felt political pressure from his colleagues in Government to spend more “every moment of every day”.
Could his departure signal a loosening of the purse strings in Government?
Dr Emma Howard, economics lecturer at Technological University Dublin, said she believed Mr Donohoe “reined in some of the desired spending within Fine Gael and within the Government” and that he had “constrained some of the worst increases”.
She noted how he reduced the tax package in Budget 2026 to allow for additional spending on targeted social welfare measures.
“I would worry that maybe those trade-offs won’t be considered as much and that spending may increase further under Simon Harris,” she said.
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Mr Heydon argues such concerns “aren’t really borne out by much evidence” when Harris’s experience as a Cabinet minister is considered.
He cited the recovery from the economic crash under Fine Gael governments and initiatives such as creating two sovereign wealth funds as examples of his party’s financial prudence. Mr Heydon said the Fine Gael leader “absolutely gets that that’s our bread and butter” and he “will continue those traditions”.
On Tuesday, Mr Harris indicated that his tenure at the Department of Finance would continue in the vein of “Prudent Paschal”.
“We should not take our strong economic position for granted,” he told the Dáil, adding that the Government “must manage our public finances responsibly and equitably for our citizens”.
He said windfall receipts such as corporation tax will be used “to address infrastructure deficits and not for day-today spending”, and long-term savings funds will continue to be built up.
Dr Howard sees Ireland’s economy, post-Donohoe, as being in a “reasonably good position, despite all of the geopolitical risks and economic headwinds”.
She noted that one of Mr Donohoe’s last acts as Finance Minister was to publish the Future Forty report, a long-term fiscal and economic assessment of Ireland’s needs up to 2065. The report sets out demographic challenges and climate risks and looks at areas such as the health service, housing and infrastructure needs.
She said there was a very narrow window to address those challenges. Dr Howard said recent budgets have seen the Government step beyond its own fiscal rules for increases in public spending.
“That kind of continued increase in public expenditure, net of tax revenue, can’t continue,“ she said, adding that Mr Harris would have to address this and broaden the tax base.
Mr Donohoe’s departure is undoubtedly a blow to Fine Gael as a party, coming shortly after the departures of Simon Coveney and former Taoiseach Leo Varadkar.
Prof Reidy says Mr Donohoe has been seen as the “intellectual core” of Fine Gael. The party turned to him when it needed to “articulate a coherent vision”.
There may be others within Fine Gael who see themselves in that space, but they “haven’t occupied it to the level or in the way that Paschal has done”, she said.
Minister for Health Jennifer Carroll MacNeill said Fine Gael has the right personnel in place to allow it move on smoothly.
“We will certainly miss him (Donohoe), but there’s always strong intellectual rigour in Fine Gael and that will persist,” she said.
Mr Richmond said the departure presented “a challenge on one hand, but also an opportunity for the party.”
He pointed to other high-profile figures moving on at the last electoral cycle. “We adjusted to that. We just have to do the same again,” he said.
While many hope to be Minister for Finance, Mr Richmond says the Tánaiste was “the only person who could possibly, in my opinion, at this stage replace Paschal”, citing Mr Harris’s significant experience at Cabinet.
Asked if she was disappointed not to get the nod for Finance, Ms Carroll MacNeill – who was previously also a junior minister in that Department – responds: “No, for goodness sake . . . I have so much work to do at the Department of Health.”
