Are we really expected to believe in 2017 London that it was the IRA that did this and not an Islamic terrorist?

Well, the plot wouldn't really work if it was IS behind it would it.

I think the book this movie is based on is a 1992 novel called The Chinaman, about a restauranteur who's child is murdered in an IRA-style bombing... The author is a journalist who covered the IRA bombings of that period at that time...

For the movie, they probably didn't have the budget or inclination to set it in the 90s, so it is a bit anachronistic and confusing to have it set in contemporary times, but there is no 'cowardice'... as it was never originally a story about Islamic terrorism... You can watch London Has Fallen, 24 and such for those storylines... Although they won't have same half-insider political intrigue that The Foreigner has...

Edit: I had deja vu as this has been asked before: https://moviechat.org/tt1615160/The-Foreigner/5a2de8c28103470012e52f2e/political-correctness

Meh... in these days of rising nationalism, it's not a huge stretch to think that some of these groups from the past might resurface in some format.

The group pretty quickly identifies itself as the "new" IRA, thus short-circuiting the natural inclination to blame it on some sort of lone-wolf Islamic terrorist within the story.