This month has seen the beginning of a new Dáil and Government, against a background of international instability which could disrupt Ireland’s globalised economy. Yet, the fundamental strength of Ireland’s economic model remains, and the newly published Draft Programme for Government indicates a continuing commitment to the enterprise economy.
Ireland faces a number of well established, domestic economic constraints going into 2025, in the form of a housing crisis, public infrastructural deficits, planning difficulties, skill shortages and certain vulnerable sectors; such as hospitality. But, for every business failure in Ireland, 27.5 new businesses are being founded – a remarkable ratio of success.
More than 7,000 businesses were reportedly removed from Revenue’s debt warehousing scheme in 2024 for failing to engage meaningfully. However, as of the end of 2024, €3 billion of the original €3.2 billion in payments deferred under the scheme had been repaid.
This is a positive sign that Covid-era liabilities are becoming less of a consideration in insolvencies, and that the legacy of the pandemic is now in the rear-view for the majority of businesses in Ireland.
Hospitality also received some positive news this month after a difficult 5 years, with the Government reportedly set to reduce the VAT rate for the sector to 9% in budget 2026. The Programme for Government indicates that there will be “measures to support SMEs, in particular the retail and hospitality sectors, acknowledging the increased cost pressures on these sectors and this will entail changes to VAT, PRSI and other measures.”
The sector will have to maintain pressure to ensure that this is followed through on, given the often-suggestive nature of Programmes for Government, but the proposed establishment of a Small Business Unit in the Department of Enterprise indicates that there is a general commitment to supporting smaller businesses.
Significantly, the Programme states that there be a new Cost of Business Advisory Forum which will “include a review of all business taxes and costs and ensure businesses are consulted before new legislation or policies are introduced that impact small businesses.” If followed through on, this would be a useful conduit for struggling sectors to suggest meaningful policy changes.
The high cost of energy remains a key concern for many sectors of the economy, but a recent High Court ruling suggests that proposed renewable energy projects have stronger judicial standing when facing down objections to planning permission, under relatively new climate legislation.
This will likely result in a further proliferation of wind farms, solar farms and offshore renewables, leading to higher domestic energy production in the long-term – if realised, this will reduce prices and also partially insulate Ireland from shocks in the European energy market.
In November I wrote that despite potential headwinds brought about by tariff policies of the new Trump Administration, Ireland’s continued commitment to pro-business policies, stability, strategic growth, and global engagement positions us as a resilient and dynamic hub for business.
This remains to be true, and our experience with Brexit highlighted the dynamic and responsive nature of both the Irish business community and our government institutions. Importantly, many of the key personnel who engaged with the Trump Administration in his previous term remain in post, and our relationships in Brussels remain strong.
If navigated correctly, there is every reason that 2025 can be another year of prosperity for Ireland, which remains one of the highest growth nations in the world, bucking the trend of economic stagnancy and political uncertainty we are seeing across Europe.
Article by: Christine Cullen, Managing Director of CRIFVision-net
Source:
https://www.linkedin.com/pulse/promising-year-irish-economy-ahead-challenges-overcome-cullen-qmbzc/
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