Ireland Economy Building on a Strong Recovery
Investing in and Sourcing from a Competitive Ireland
Trade has been the key driver of our economic recovery, and export levels are now significantly higher than the pre-crisis peak in 2007. Export grew by 12.6 per cent in 2014, with strong growth recorded in both traditional and emerging markets. Exports are now at an all-time high, significantly higher than the pre-crisis peak in 2007. Particularly strong growth is being seen in Life Sciences, Cleantech and ICT.
This is not surprising, as we have one of the most open economies in the world. In fact, Forbes magazine ranks us as the best country in the Eurozone for business and one of the top four countries for business in the world.
Growth in exports has been across all sectors and main export markets. Particularly strong growth was seen in Lifesciences, Cleantech and ICT.
Ireland’s competitiveness relative to our trading partners has improved significantly in recent years. Labour costs, commercial property prices and other business costs have fallen.
Indigenous exports by companies increased by 10% in 2014 to hit an all-time high of €18.6 billion. This compares to an equivalent figure of €8.5 billion 10 years ago, in 2004. Growth was recorded in exports to all international markets and across all sectors, with the highest increase seen in the software sector (+19 percent y-o-y). Indigenous Irish exporters are winning business against the biggest names in the world with innovative products and services.
Our agri-food sector is performing extremely well, increasing exports by 45 percent since 2009 to reach a record value of almost €10.5 billion in 2014. We are working hard to secure new market access opportunities for Irish produce, such as recent agreements with the US and Chinese authorities, paving the way for Irish beef exports to these important markets. We are the first EU state to have bans on EU beef exports lifted in the US and in China, 15 years after the BSE scare.
Through the Origin Green initiative, Ireland is well on its way to being a global leader in sustainable food production, with innovative quality programmes whichprovide the tools for measuring and improving our carbon footprint at all stages of the food chain.
The Irish dairy processing sector is ramping up for the end of EU milk quotas. Recent investments by Government and industry will position Ireland as a world leader in dairy innovation, and help to maximise the long-term growth opportunities created by an anticipated increase of 50 percent in the Irish milk pool by 2020.
Foreign Direct Investment (FDI) continues to be a key contributor to Ireland’s economic development and growth, providing rewarding employment for over 256,000 people directly, with many tens of thousands of additional jobs supported indirectly.
Over 3,300 foreign-owned companies have put down roots in Ireland. These include over 1,200 of the world’s most successful global businesses, which have chosen Ireland as their strategic base in Europe, exporting goods and services worth €124.5 billion in 2013.
Why? There are many factors at play.
We have a strong pool of highly skilled, multilingual workers in the only English-speaking country within the Eurozone, providing barrier-free access to an EU market of over 500 million consumers.
According to independent studies, Ireland is ranked first in the world for the availability of skilled labour and also tops world rankings for the flexibility and adaptability of our workforce.
Ireland offers a pro-business environment, together with a stable and competitive corporation tax regime and strong incentives for research and development.
In fact, 50 percent of the population is under 35, giving us the youngest population in the EU. And over 50 percent of Irish 30-34-year-olds have a third-level degree – higher than any other country in the EU. We have the highest proportion of science and engineering graduates in the OECD.
Maybe it’s not so surprising, therefore, that Ireland is home to:
- 9 of the top 10 global software companies;
- All of the top 10 ‘Born on the Internet’ companies;
- 9 of the top 10 global pharmaceutical firms;
- 15 of the 20 top global medical technologies companies;
- 15 of the top 25 global financial services companies.
Companies in North America such as Amazon, Bristol Myers Squibb, Fidelity, LinkedIn, Apple, Survey Monkey, Air BnB, Johnson & Johnson and West Pharmaceuticals have made major investments in Ireland, as have European companies like SAP, Deutsche Bank, Zurich and Ericsson and China’s Huawei.
Ireland’s development agency for FDI, IDA Ireland, is committed in its Winning strategy to generating 80,000 new jobs by 2020 from Foreign Direct Investment as it targets a range of sectors, including: internet of things, big data, security biometrics, smart ageing, portable services and financial technology.
In recent years, Ireland has also developed into a vibrant start-up location, offering an ecosystem that provides access to skills, finance, innovative suppliers and customers. In fact, start-up activity is at a record high and we are the top entrepreneurial country in Europe according to recent studies, ranking among the best in the EU in terms of innovation output. High growth female-led start-ups now account for 24% of new start-ups and, in the technology sector in particular, Dublin is a leading European hub for start-ups, fast-growing firms and talent.
The Government is pushing new measures to deliver on ambitious targets for job-creation by start-ups. In fact, there has never been a better time to start a business in Ireland.
In recognition of the role of entrepreneurship as a huge driver of economic growth, the Government published Ireland’s first-ever National Entrepreneurship Policy Statement in 2014, a cross-Government comprehensive plan for entrepreneurship. The key target in the plan is to double the jobs impact of startups in Ireland over the next five years.
As an entrepreneurial nation, Ireland has many advantages and opportunities – we have new tax incentives and over €1 billion in early-stage seed and development funding and venture capital, an enviable presence of leading international companies, a skilled workforce, good accelerators and incubators for early stage companies and well-established support systems from State agencies.
In Dublin, in October 2014, Niamh Bushnell was appointed Commissioner for Startups to promote the city as a global tech hub. Dublin punches well above its weight as a location where Startups, Multinationals and a strong Ecosystem coexist and amplify each other.
Economic Growth and Employment
The turnaround in Ireland’s fortunes over the past several years has been remarkable. This has not only been possible due to hard political decisions being taken and implemented, but also because of the resolve of the Irish people. The Irish people have always been our country’s greatest asset and the reason why people invest, locate and create jobs in Ireland in such great numbers. Their determination to turn the country around and the resilience, sacrifices and hard work over the last number of years has brought us to this point.
Ireland has a young, dynamic and skilled population, and our capacity to grow in the future remains strong. The Department of Finance is forecasting GDP growth of at least 3% in the medium term.
All key sectors of the economy are now growing: manufacturing, services and construction.Importantly, domestic demand is making a positive contribution to growth for the first time since the crisis began, with consumption increasing by 1.1% year-on-year in 2014, and investment up 11.3% over the same period.
Unemployment has dropped sharply from a peak of 15.1 percent. More than 104,000 jobs have been created since the low-point of the crisis in mid-2012, and we are seeing a turnaround in a number of key sectors which service the domestic economy, on foot of policy measures targeting sectors such as tourism, agriculture and construction. The Government’s strategy to reach full employment by 2018 remains firmly on track.
The Government recently established the Strategic Banking Corporation of Ireland, an SME-focused organisation that will leverage funding of €800 million to provide new financing products to small and medium-sized businesses over the next 24 months.
Stability in our Public Finances and Banking Sector
Ireland has maintained a phased and steady adjustment path towards our fiscal goals, while developing and implementing measures to sustain the recovery. We have stabilised the public finances and the restructuring of the banking system continues apace. Debt levels have peaked, are on a downward trajectory and, with borrowing rates at record lows, the markets view our debt as sustainable.
Through prudent management and negotiation, Ireland has made significant progress in reducing the cost of the debt, to ensure that it is affordable and is not acting as a barrier to growth. The promissory note transaction, the refinancing of the IMF loans, the reduction in interest rates and the extension of the maturities on our European loans have reduced significantly the cost of servicing the debt.
The Irish banking system in now in a much stronger position, with the banks continuing to make significant progress in restoring financial health, benefitting from the recent improvement in the macro-economic environment.
Securing the recovery means building on the strategies that have delivered to date. The Government knows where Ireland wants to be in 2020 and has set out goals for the economy, for employment and for the public finances for that year and is implementing the policies to achieve them.
International Financial Services
Ireland today is a globally-recognised centre for international financial services, with a thriving and growing IFS sector, which is making an important contribution to the economy. The core of this valuable industry is over 400 IDA Ireland and Enterprise Ireland client companies employing more than 35,000 people.
Ireland is home to over 200 foreign multinational IFS companies, including the world’s largest companies in sub-sectors like banking, funds, asset management and investment (with €3.2 trillion of assets under administration), insurance and reinsurance, and aircraft leasing.
Twelve of the top 20 Tier 1 Capital Banks are based in Ireland.
Ireland is a global leader in aviation leasing and finance, with 14 of the top 15 global aviation lessors and 50% of the world’s commercial aircraft owned or managed from Ireland.
Over 200 Irish-owned IFS companies are at the leading edge of international finance services in a range of sectors including payments, financial technology and services. In payments, we’re recognised around the world as a leader in Dynamic Currency Conversion, PCI Compliance and payment processing platforms.
Ireland’s strengths, including the availability of highly-skilled talent, a culture of innovation, tax competitiveness and a strong client focus, make Ireland among the most attractive locations in the world in which to do business.
In 2015, the Government launched an ambitious and action-oriented International Financial Services strategy, IFS2020, which seeks to enhance Ireland’s position as a globally competitive international financial services location and build on our particular strengths in this area.
We are looking to attract further investment to Ireland from the world’s leading financial services companies and to accelerate strongly the growth of innovative Irish companies in the sector.
Research and Development
Ireland has a strong scientific heritage – one that the world is perhaps less familiar with.
2015 marked the bicentenary of George Boole, forefather of the Information Age, first Professor of Mathematics at University College Cork and one of the most significant scientists to have lived and worked in Ireland.
Boole pioneered what we now call Boolean algebra – in which he merged logic and algebra into symbolic algebra. Today it forms the basis for everything from smartphones to the Internet. Many of the discoveries, services and products of high tech companies based in Ireland today would not have been possible were it not for Boolean logic and we continue to contribute to this journey of discovery and innovation of George Boole and his peers.
In recent years, Ireland has been building up a reputation for excellent research and supporting significant academic-industrial collaborations.
Ireland continues to enhance its reputation as a world leader in science and technology. Ireland is now in the Global Top 20 for the quality of our scientific research. We’re first in the world for Immunology and for Animal and Dairy; third for Nanoscience; fourth in Computer Science; sixth for Materials Science. The journal Nature lists Ireland as one of five ‘up and coming’ destinations for high-level research.
Investment in research and development are a key part of our recovery and through the Action Plan for Jobs the government is focusing on key scientific areas such as Big Data, ICT skills and innovation in health.
International collaboration between researchers in academia and industry play a key role in delivering excellent research. These types of collaborations are very much part of the research eco-system in Ireland. Under the Action Plan for Jobs, 12 SFI Research Centres have been established through an investment of €355 million from Government through Science Foundation Ireland and a further €190 million from industry collaborators. Over 200 companies are involved in collaborations with the Research Centres. These 12 SFI Research Centres are focused on strategic areas of importance to Ireland, with a focus on delivering scientific excellence with economic and societal impact – Pharma, Big Data, Medical Devices, Nanotechnology/Materials, Marine Renewable Energy, Food for Health/Functional Foods, Perinatal Research, Applied Geosciences, Software, Digital Content, Telecommunications and Medical Devices etc.
Tourism is a vital industry for Ireland. It is one of our largest indigenous industries, deeply rooted in the fabric of Irish society, employing over 200,000 people across the country.
In 2014, it is estimated that overseas tourism delivered €3.7 billion to the Irish economy. According to the Central Statistics Office, there were 7.6 million overseas visits to Ireland in 2014, an increase of almost 9% on the previous year.
This growth did not happen by accident. The Irish Government is fully committed to tourism and recognises it as a significant driver of economic renewal. We have consistently made policy decisions that have allowed the tourism sector to grow and prosper.
The Government’s initiative in zero-rating the air travel tax has made it easier for visitors to travel to Ireland. Similarly, our reduction of VAT on tourism services has been successful in increasing employment levels in the sector – creating 5,000 new jobs in tourism last year alone. This measure also, I believe, has helped to deliver improved value for our visitors in recent years. Ireland’s value for money rating has now doubled since 2009 and nine out of ten holidaymakers tell us that they are satisfied with the value offering of Irish holidays.
The Lonely Planet ranked Ireland fifth on its list of the Top 10 in the world to visit in 2015. Ireland was described as “stunningly scenic,” and the genuine Irish welcome was praised as “the real deal”.
One of our most exciting developments of recent years has been The Wild Atlantic Way – some 2,500km of the most captivating coastal drive in the world, stretching from the Inishowen Peninsula in Donegal to Kinsale in County Cork. The Wild Atlantic Way takes travellers through some of the most dramatic scenery on the edge of Europe, a coastline that has shaped the development of its people, communities and settlements.
The Wild Atlantic Way offers visitors an opportunity to connect with friendly, welcoming people in towns and villages along the way, to experience our heritage and culture and enjoy our great, locally-grown, fresh food and freshly caught seafood. The Wild Atlantic Way is proving very successful in attracting significant numbers of visitors from overseas.
Dublin was voted the fifth-friendliest city on earth by Condé Nast Traveler in 2014. It was one of only two European cities to make the top ten list. This year we will also see the launch of Dubline, a new discovery trail in Dublin, our vibrant and historic capital city. Exciting developments charting 5,000 years of heritage in the south and east of the country will be launched later this spring.
We have festivals taking place all across Ireland throughout the year, with themes and events to suit everyone.
For golfers, we have world-class golf courses where our famous golfers honed their skills – including Rory McIlroy, currently world number one, Darren Clarke – who will lead Europe in next year’s Ryder Cup, Padraig Harrington, Paul McGinley, and many others. Golf in Ireland combines world-class courses with our unique brand of hospitality and welcome.
We may be a small island, but when it comes to food, we’ve got big culinary ambitions. Irish cuisine harnesses the best, locally grown ingredients from skilled and dedicated artisan producers, the freshest seafood the Atlantic can provide, all lovingly prepared by a new generation of chefs.
Our new Tourism Policy sets a target of achieving €5 billion in overseas tourism revenue by 2025, compared to around €3.7 billion in 2014. We aim to grow overseas visits to 10 million per year in the same period, and increase employment in tourism by 50,000, a 25% increase on the current level.
Getting to Ireland has never been easier from the US and Canada, mainland Europe, Great Britain and from Australia and New Zealand, China, India and other long-haul markets with a growing range of direct and convenient one-stop flight options.