Confirming the expectation of many, last week’s report by Ibec has predicted that the Irish economy will not grow as previously predicted, which is consistent with much of the down casting that is taking place globally.

Rising energy prices, supply chain costs and inflation continue to bite as a result of the tragic war in Ukraine.

  The report predicts that the Irish economy is expected to grow by just 2% in 2023, significantly down on the 5.6% growth that is expected in 2022. While the economic storm clouds may be gathering for many economies across Europe, Ireland’s remains better equipped than many to cope the challenges ahead.

As a small open economy, the 2008 crash hit Ireland’s economy hard and some may fear that the harmful effects of the global downturn will see Ireland hit hard once again. However, prudent management of the fiscal levers over recent years has seen the Irish economy deliver budget surplus of €7.3 billion to October this year.

  This surplus puts Ireland in a strong position to weather the storm, for now at least. The country is in a strong position. The budget surplus is a direct result of some hefty corporation tax receipts and strong growth in both income tax and VAT. The Department of Finance have revealed that there has been a 25% increase in tax revenue on the previous year– a colossal jump for any economy regardless of size. This amounted to €63.9 billion as of the end of October (mostly as a result of increased corporation tax), while income tax, is up 15% on an annual basis to €23.9 billion.

  A decade of strong growth has seen Ireland trail only Luxembourg in terms of GDP per capita while other indicators remain strong, with the most up–to–date Economic & Social Research Institute (ERSI) macro–economic note stating that Irish exports remain strong and continue to grow at 3% in the previous quarter.

Much of Ireland’s economic success over the last two decades has been built on the cornerstone of its low corporation tax rate, which has helped to attract foreign investment much of it as we know from US tech. Even this year support for the tech sector has remained strong, with the Irish Venture Capital Association (IVCA) noting that investment in Irish tech companies rose by 21% to a record €778.1m.

  However, there may be some warning signs starting to emerge. The recent dip in share price for many tech firms, highlighted by the news last week that Stripe is to cut 14% of its global workforce, the lay–offs at Twitter and reports that Meta is considering job cuts including in Ireland may be cause for concern. There may also be challenges posed by the potential setting of a global minimum corporation tax of 15% as per the recent OECD agreement.

  Looking to the future the Minister for Finance Pascal Donohoe was himself cautious, warning that to introduce new spending commitments based on revenues that may not be permanent would not be wise, something that he acted on in the Budget 2023 with temporary support for businesses and households to help them through the cost–of–living crisis. There is no doubt that we are heading into a very challenging period ahead with households and businesses at the forefront of those headwinds, but Ireland is in a much better place than a decade and a half ago to support communities and help protect the economy. Let’s hope the government get it right.

  As for getting it right, it’s a case of a second bite of what is now a very battered and bruised cherry for the UK’s PM Rishi Sunak, after Liz Truss catastrophic premiership. Last week’s news that the Bank of England is hiking interest rates 0.75%, the largest rise in 30 years, in an effort to tackle spiralling inflation is evidence that all is not well. In a stark warning the Bank’s Governor Andrew Bailey said that the UK should brace itself for a recession that could last up to two years, and he was unambiguous on the hugely detrimental decisions that were made, turning a global challenge into a national crisis. This and the challenges posed by a seemingly endless stream of political scandals mean that leadership has been in scant supply over recent months, which must change with the challenges ahead.

And finally, in Northern Ireland, the challenges presented by the global recession are compounded by ongoing political instability without an Executive or sitting Assembly or any prospect of one. No support to take decisions that can cushion people, communities and jobs against rising prices and interest rates that may push many mortgage holders to the edge this winter. The inability of MLAs to elect a speaker or an Executive, the ongoing challenges posed by the NI Protocol and the spectre of another Assembly Election mean that stable government for now appears some way off. You would have thought that the greatest cost of living crisis in a generation would be all that is needed. Get it sorted, people and businesses need support.