RDS, Thursday, 7 September, 7pm
Introduction
President of IBEC, members, distinguished guests, ladies and gentlemen, good evening. I would like to thank Ibec CEO Danny McCoy, outgoing President Imelda Hurley and incoming President Paul Duffy, for the opportunity to address you here this evening.
Firstly, I know I speak for all of us in this room in expressing gratitude to Imelda for her strength, leadership and guidance during her term as President. You’ve been a big success.
And to incoming President, Paul Duffy, we all wish you the very best in your term ahead. Paul brings a wealth of business knowledge, not only as a Board Member of Ibec, but also through senior leadership positions with the WRC, the IDA and the American Chamber of Commerce - to name but a few.
Economic context
I am very conscious that this has been another year of challenges and opportunities for Irish and international business. We’re living through an extraordinary period of history, facing up to a constantly evolving and changing global outlook – impacted by huge geopolitical turbulence from the ongoing impact of the war in Ukraine, tension between global power blocks, globalisation retreating, democracy being undermined in countries that should know better, the effects of stubborn inflation and supply chain disruption, accelerating climate change pressures, continued fluctuations in energy markets, ongoing impacts from Brexit, and the aftermath of a COVID-19 pandemic, which is still with us.
That’s some list.
As political and business leaders in this room, our job has been, and continues to be, to create resilience and even find opportunity in the market and business environment turmoil of recent years.
And we have; despite the challenges, the Irish economy has continued to perform robustly. Inflation is now beginning to abate as energy costs fall. The Central Bank is predicting that growth in the domestic economy will be 3.7% this year – which is slightly stronger than previously anticipated. And while there have been some very unwelcome job losses in our globalised technology sector, it is important to put these strains in context, overall job losses in big tech in Ireland represent about 2% of employment in the tech sector here, a fraction of the growth delivered over the last five years.
FDI remains positive. Ireland has enhanced its status as a safe, competitive location to build and sustain a global business. If anything geopolitical tension and Brexit fallout have reinforced that positioning. The IDA’s performance in the first half of this year – attracting 139 investments, with a strong regional footprint - is remarkable - given international headwinds.
And, it’s worth noting, 52 of those were companies investing in Ireland for the very first time.
Investor commitment to Ireland remains strong, a view made even clearer by a recent American Chamber of Commerce survey which found that 70% of its US member firms expect to increase employment in Ireland over the next 12 months.
These are powerful statements of confidence in Ireland.
However the outlook for any open economy, such as Ireland’s, is uncertain - even at a time of full employment. The increasing urgency of climate change and the rapid advancements in technology, alongside the fundamental changes underway globally, require us to adapt in order to grow. There’s no room for complacency.
We in Government remain focused on what we can do, to respond with the fiscal and policy tools available to us to support business to adapt to new realities; central to that is the continued implementation of the recommendations in the White Paper on Enterprise that was published at the end of last year - a policy document that many in this room contributed to on substance and content.
The approach seeks to ensure that Irish-based enterprise succeeds through competitive advantage founded on sustainability, innovation and productivity. To do this, we are focusing on policy objectives covering decarbonisation and digital transformation, FDI and trade, the indigenous exporting and locally trading sectors, innovation and building on existing strengths.
In an international environment where globalisation and free trade is being questioned and protectionism and trade barriers are more common place, Ireland needs to deliver on our Trade and Investment Strategy. As one of the most globalised countries in the world, we need to ensure that our business friendly, open economy is positioned to benefit from the network of EU Free Trade Agreements and new trade opportunities that develop.
International trade supports around 1.3 million jobs in Ireland. More than 80% of the products and services we produce are destined for markets outside of Ireland. The total value of trade to Ireland exceeded €1 trillion in 2022 for the first time, thanks to the success and ambition of many in this room.
So we must remain steadfast in advocating for open trade and a rules based multilateral trading system that allows small, open, competitive economies to thrive. And we will!
In many ways the pace of new technology is perhaps as big a disruptor as conflict or global politics. Ireland is well placed to be to the fore in harnessing the opportunities from rapid developments in AI, machine learning, quantum and other emerging technologies. The Government published its first AI strategy over two years ago, and recently published an updated progress report which sets out the strategic direction and next steps for how we engage with AI – including a proposal for establishing an AI cluster. Getting the balance right between robust regulation and facilitating innovation is a policy challenge that Ireland needs to be vocal and active on internationally.
On Climate and environment, this room will know that these issues are now central to competitiveness and business success as well as a morally imperative. The green transition, moving towards a cleaner energy system and protecting ecosystems is something Ireland must deliver. Only a public/ private, government/ business partnership can deliver it.
We have natural competitive advantage on renewable energy that we must use with a level of ambition not previously adopted. A maritime area approximately 8 times the size of our landmass and a powerful wind resource, can not only deliver climate targets, but transform economic development and energy security over the coming decades.
I’m developing a National Industrial Strategy for Offshore Wind that will look to maximise the economic opportunity, from both a supply chain and industrial demand perspective, associated with our overall target of harnessing 37GW of offshore wind by 2050. It’s exciting. It’s a project on the scale of Ardnacrusha - and I don’t say that lightly.
A few words on the Budget 2024:
There is no doubt that the economy remains in excellent health. We have a strong macroeconomic and fiscal position, sound institutions, and a supportive business environment.
Today, we have more people at work than ever before, female participation in the workforce is at an all-time high, and youth unemployment remains low. Our job in government is to ensure that we maintain all of these gains and that we make ambitious plans for the future, in the face of the uncertainty that I mentioned earlier.
In that context, it is vital that we deliver a strong, enterprise focused budget.
But while Budget 2024 is being framed against the backdrop of a healthy economy, it must strike a balance between the need to invest in public services and support living standards, without committing expenditure based on income that is not guaranteed in the future. We’ve seen just this week a €1 billion drop in corporation tax in August, which - while the annual figure is up on last year - underlines the volatile nature of huge corporate tax returns.
One of the primary areas of focus for my own Department in the Budget will be to support decarbonisation of the enterprise sector. We are working closely with Enterprise Ireland to get the supports right.
We’ll also focus on promoting entrepreneurial activity in the domestic economy, and ensure that Ireland remains a preferred location for international investors in the context of agreed changes to corporate tax rates from January 1st under new OECD pillar 2 commitments.
I want to further develop measures also to assist with the scaling of Irish-based firms, ensuring that entrepreneurs and founders are rewarded for their efforts and risk taking.
Improving the equity landscape for all businesses and incentivising the growth of angel investment in Ireland is also a conversation we are having with the Department of Finance.
Capacity constraints and housing
Given the strength of the Irish economy, challenges in relation to carrying capacity continue to impact businesses and present a risk to Ireland’s international competitiveness. This includes housing, which remains the Governments priority in terms of delivery.
More homes are being built. 30,000 were built in 2022 – up more than 40% on 2021. Recent CSO figures show a continuation of this trend during 2023, with completions, planning permissions and commencements all up.
The Government also remains committed to driving substantial investment in overcoming other constraints in areas such as transport infrastructure, energy, water, and climate adaptation.
At 5% of modified gross national income, our NDP investment is now well above the EU average. We’re spending over €12 billion a year on capital investment for the future. I can remember a time when it was a fraction of that number. That’s why my overriding concern in this and future budgets is never allow a return to boom and bust budget cycles.
A final word on wages and business costs
There is a need to address existing barriers to labour force participation and to ensure Ireland remains an attractive place to live and work.
We are working on the introduction of a living wage for employees, to realise the proposals from the Low Pay Commission, that a living wage be set at 60% of the national median wage, phased in by January 2026, using a review procedure that takes account of prevailing economic conditions.
We want to strike a balance between a fair and sustainable rate for low paid workers, while not creating significant negative consequences for employers and competitiveness. I want to thank IBEC for their role in supporting progress to date.
I know the cost of doing business remains a pressing concern for many. As a price taker on most international markets, many of the drivers of cost inflation during recent times have been outside of our control. I want to assure you that Government remains proactive in limiting the fallout from higher rates of inflation where possible and will continue that approach in the upcoming Budget.
In closing, I would like to reiterate my best wishes to President Paul Duffy for the 12 months ahead, and to thank Ibec for its broad and unwavering support to ensuring a more prosperous country for our people and our businesses.
I am fully confident that over the next 12 months, we will build upon the strong foundations already in place, to maintain an economy that continues to be the engine to generating the prosperity and quality of life that Irish people deserve.
Let’s look ahead with confidence.
Enjoy the evening!
ENDS