Irish Labour reject Cowen plan and call for elections

The other main parties had yet to comment but Labour's comments signalled Mr Cowen's plan, meant to reassure investors, looked set to fail.

Deeply unpopular and struggling to shrink the worst budget deficit in the European Union, Mr Cowen wrote to the heads of the main opposition parties earlier this week, inviting them to talks.

But doing a deal with Mr Cowen, whose government is expected to fall next year, would curb their own policy options and give the embattled prime minister a boost.

"We are not going to fool people into believing that there is some kind of phoney consensus that can be put together as a substitute for having a strong and stable government that will see through budgetary plans over the next four-to-five years," Labour leader Eamon Gilmore said.

The main opposition party, Fine Gael, had welcomed Mr Cowen's offer but its leader Enda Kenny said previously that he would not replicate a 1987 move by the party to support its rivals' economic policies because it cost it votes. Both Gilmore and Kenny have said they will meet Mr Cowen, but a deal is not expected.

"A lot of this is just posturing because neither side wants to be seen to be the villain of the piece," said David Farrell, professor of politics at University College Dublin.

"The political reality is that it's not a consensus at all in any shape or form. I can't personally imagine a scenario in which anything approaching a National Government type of consensus can emerge on this side of an election."

Riding high in opinion polls, left wing Labour wants Mr Cowen to dissolve parliament and call a snap election - something the premier will not do.

All of Ireland's main political players agree it needs to get its deficit, set to blow out to 32 percent of gross domestic product (GDP) this year due to the one-off inclusion of a banking sector bailout, below an EU limit of 3 per cent by 2014.

Cross-party agreement would reassure investors that Dublin will stay in austerity mode even if the government falls at some point next year but markets are not expecting a deal.