Ireland must take cautious steps to safeguard its economy against potential risks stemming from changes in US policies, according to a new report by Goodbody Stockbrokers. The analysis warns that protectionist measures under the Trump administration, including proposed tariffs and tax changes, could significantly impact Ireland’s tax competitiveness and its attractiveness as a destination for investment.
Dermot O’Leary, chief economist at Goodbody, highlighted the potential vulnerability of Ireland’s economy to the US’s shift in approach, especially in light of President Trump’s incentives to bring businesses back to the US. He noted that Ireland’s economic reliance on multinational corporations—especially in the tech and pharmaceutical sectors—could be jeopardized if the US alters its corporate tax framework.
To mitigate these risks, O’Leary recommends that Ireland invest heavily in capital projects, such as infrastructure, to ensure long-term economic stability. He also advised that the Irish government run a balanced budget, excluding the surplus generated by multinational tax payments, and put any excess tax receipts into savings funds. These measures, he said, would maintain Ireland’s fiscal stability while ensuring that the country remains competitive and prepared for future economic pressures.
The report underscores Ireland’s reliance on US multinationals, which contribute 83% of the country’s corporate tax revenue and employ 10% of the private sector workforce. O’Leary pointed out that while Ireland runs a significant trade surplus in goods, driven largely by pharmaceutical exports, it also faces a sizable services trade deficit with the US. This trade imbalance could be further exacerbated by changes in US trade and tax policy.
Despite the potential risks, O’Leary also noted that there could be upsides from improved economic dynamism in the US and increased profitability for US firms operating in Ireland. He projects that Ireland’s domestic economy will grow by 3% in 2025, with a slight slowdown to 2.8% in 2026.
In terms of housing, the report predicts a modest increase in residential building, with 34,000 homes expected to be completed in 2025 and nearly 40,000 by 2026. Wages are expected to continue rising, with a 5% increase forecast for this year.
O’Leary also pointed to the country’s strong labor market, which is nearly at full employment. He highlighted the rise in female participation in the workforce, attributed in part to the growing trend of remote working, which has further strengthened the labor market.
In conclusion, O’Leary stressed that Ireland’s economic future depends on carefully managing its finances and fostering continued investment in infrastructure to withstand global uncertainties.
