The notion that Ireland would follow the economic difficulties of Portugal and Greece if it backtracked on austerity is “wrong”, Sinn Féin’s Mary Lou McDonald has said.

Responding to comments from Minister for Finance Michael Noonan about instability in Portugal, Ms McDonald said Ireland could afford a twin approach - relief for families through the elimination of water charges and property tax, and “substantial sustainable investment” in public services such as the HSE.

She said Sinn Féin had taken great care in formulating policy “to ensure the resources were there to pay for them” and had been the only party to get figures on this “fiscal space” correct.

On the subject of the financial difficulties in Portugal and Greece she said the Government “didn’t exactly cloak themselves in glory by way of taking a position of solidarity with many other states that were struggling”.

She said the in Ireland “it is our job to protect the living standards and the service levels that the citizens enjoy, that is the first job of work. Our manifesto is about that. We could have a very long discussion around, not just the anti austerity position, but the imposition of austerity which certainly didn’t work. I don think you could argue with that”.

Ms McDonald was speaking after Minister for Finance Michael Noonan said Irish voters should take note ahead of the general election of how political instability in Portugal has caused problems for the country’s economy.

Portugal’s markets this week had one of their worst runs for at least two years with borrowing costs rising and stocks falling sharply.

The country’s new Socialist-led government is under pressure from Brussels and, after its budget for 2016 was rejected. An agreement to draw up “Plan B” deficit cuts to ensure its anti-austerity budget complies with EU rules failed to satisfy investors who are continuing to penalise the country’s government bonds.

The Socialists, supported by the far left, took power in Portugal late last year after defeating a short-lived minority centre-right administration in a parliamentary vote on its policy programme.

The previous conservative government led by Pedro Passos Coelho had taken the country through a painful bailout programme.

“Political instability leads to economic instability and the Portuguese people are now footing the bill,” Mr Noonan said. “Like Ireland, Portugal was making economic progress. But interest rates on Portuguese 10-year debt have doubled to over 4 per cent in recent weeks as international investors have baulked at the policies of the new coalition government.”

Around a third of Portugal’s €148 billion of outstanding debt falls due over the next three years. The higher yields rise, the more expensive it will be for the country to roll over that debt, which in turn squeezes its finances.

Portuguese prime minister Antonio Costa said the Socialist government would prepare additional budget measures to make sure the country meets EU fiscal goals and reinforces investor confidence, but he does not think they will be needed .

Mr Noonan said Ireland this week sold 10-year bonds at a yield below 1 per cent but the State’s economic recovery remained fragile.

“If we were forced to pay the same interest rate on our borrowings as Portugal, the recovery would stall and tax increases could be required to pay for political instability,” he added.