The results are in - what now?

The Govt has a monumental challenge to restore stability to the public finances

Whatever way the fall-out from the 'super-Friday' elections is assessed it still comes down to one crucial question: to what extent will the results impact upon the cohesiveness and stability of the Government?

The economic firestorm of the past year has inflicted significant damage on the coalition; in polling terms it had become the most unpopular administration since polling began and the weekend election counts have only served to underline that reality.

For Fianna Fáil and the Greens the results in Dublin for the local, bye-election and Euro election counts are a disaster. Fianna Fáil has been left trailing by Labour and Fine Gael while the Greens have been wiped out.

The national picture is not much better. While a national share of the vote at just over 25% is better than the 20% or so flagged in the polls it is still an historic low point for Fianna Fáil.

More worryingly it is down some 16% from the General Election result in 2007 when the party achieved just over 41%. At less than 3% the Greens are living on the margin of error; they are an endangered species.

Fianna Fáil ministers have made the case they have been here before - the drubbing in the 2004 local elections - and yet they managed to turn it around in time for the 2007 General Election.

The circumstances this time, however, are of a different magnitude. In 2005 and 2006 the Celtic Tiger reached its peak and the 'feel-good' factor was more than sufficient to erase the memories of 2004.

In 2002 and 2007 the Government was able to dovetail the electoral cycle with the economic boom but that option is no longer available.

The very best the Coalition can hope for is that the recession bottoms out this year and that the main economic indicators begin to stabilise.

Even that relatively benign scenario still leaves the Government with a monumental challenge to restore stability to the public finances.

It will mean one of the toughest Budgets ever later this year, where serious cuts in social welfare spending are on the cards in a package of up to €4 billion in overall spending cuts.

The political implications are stark for Fianna Fáil. The last Irish Times/TNS mrbi poll indicated that most of the party's remaining support is now concentrated amongst low income families and welfare recipients, the very people most likely to feel the impact of the next phase of Budget changes.

At the very time when the Government most needs authority and a reasonable consensus for taking difficult decisions they are the two pillars under the most severe pressure.

For the main opposition parties, Fine Gael and Labour, the elections have considerably strengthened their positions. After bringing his party to the point where it has surpassed Fianna Fáil nationally any talk of Enda Kenny's leadership is now off the agenda. Labour have made big gains across the country and returned two new MEPs.

Nonetheless, without the Dáil numbers to force an election it is still a waiting game for the Opposition.

The election outcome has left the Taoiseach, Brian Cowen, and the Green Party leader, John Gormley, facing serious internal party difficulties at a time when their ability to manage their coalition will be stress-tested like never before.

There is, at this stage, little evidence to suggest that the Taoiseach's leadership of Fianna Fáil is facing any immediate threat.

But his authority and confidence in his judgement have been eroded over the past year and the election outcome has done nothing to halt that process.

Ultimately, Fianna Fáil TDs will be looking to see what strategy offers the best prospect of retaining the maximum number of seats in a general election. Many are privately worried about the prospect of a general election under Brian Cowen's leadership. Yet changing leader is not going to change the reality of the economic or budgetary challenges.

But whenever a general election comes Fianna Fáil can be assured of survival. The same cannot be said for the Green Party. The party is now in the same territory that brought about the demise of the PDs.

The most immediate political challenge for Brian Cowen is the Green's request to renegotiate the Programme for Government. At their annual conference earlier this year the Greens put in place arrangements for a special conference next year to review their position in Government.

It now looks as though this conference might be brought forward to take into account any revised Programme for Government. Having staked their claim for a review the Greens will have to produce substantial and real changes on some policy fronts to retain their credibility. That much has been acknowledged by Senator Dan Boyle in the aftermath of the elections. He had spoken of the need for real change adding that if there isn't it 'will raise further questions'.

But just how much change is possible in a cash-strapped Government? And how much can Fianna Fáil concede without creating more problems among their own ranks?

One area the Greens will look to is education. A striking feature of the party's two conferences since entering Government has been the fierce criticisms of the cuts in education. Education was one of the party's 'deal makers' in entering Government.

Reversing the cuts in education will not be easy, not to mention the party's past opposition to the return of third-level fees. A failure to make real progress on the education front may result in deeper disillusionment with the party's role in Government.

The prospect of a special conference to decide the Greens continued participation in coalition will leave ministers in both Government parties looking over their shoulders in the months ahead.

While ministers still talk about the Government running until 2012, the extent to which that is a realistic objective now depends on their ability to get beyond the revision of the Programme for Government and the next Budget with their numbers intact.