Taoiseach Bertie Ahern has said that the 'all-island' economy is emerging as a stronger entity on the world stage through greater co-operation.

Mr Ahern made the remark at a business breakfast in Co Louth this morning, which was also attended by SDLP leader Mark Durkan.

He also said that closer cross-border economic ties would help in the face of global recession.

The meeting has fuelled speculation that Fianna Fáil and the SDLP are continuing to explore the development of a formal relationship.

RTÉ's Northern Editor Tommie Gorman says a merger or a more formal relationship between the two parties is a potential liaison with promise and pitfalls.

For Fianna Fáil, establishing structures in Northern Ireland fits the founding fathers' vision of a 32-county party.

However, contesting Northern elections could mean a role of minor players for an organisation used to dominating contests.

For the SDLP, links with Fianna Fáil could bring added profile and momentum. But there would be implications for the party's Labour connections and the relationship with the Socialist grouping at European level, nurtured by John Hume.

Watching the early days of dialogue is Sinn Féin, a party that had a disappointing General Election in the Republic last June, a month after it took a lead role in power sharing north of the border.