BUSINESS GROUP IBEC has published its economic outlook from the first three months of this year, and predicts that an additional 50,000 jobs will be created in Ireland in 2017.
The group said that the labour force will grow 2.7% this year and said that this increase, coupled with tax cuts, wage growth and limited inflation “bodes well for consumer spending”.
Another report by accountancy firm EY said that over three-quarters of entrepreneurs plan to recruit more people in the next year, but also highlighted their worries over the ever-increasing cost of doing business in Ireland.
Growth
Ibec forecasts that Ireland’s GDP will grow by 3.1% this year, and by 2.8% in 2018, “driven by a strong domestic economy”.
It said that the country is in a strong position with non-construction employment back to their highest levels since before the economic crisis.
The additional 50,000 jobs will come mostly from the service industry, almost 30,000, with a further increase in industrial sectors but a slight fall expected in the numbers employed in the agriculture sector.
When construction is excluded, most areas of the country are above the pre-crisis peak levels of employment, but the “south-west and particularly the border counties are still some way short”, Ibec said.
While consumer spending is expected to rise 3.3% this year, exports are expected to slow with Brexit effects “already evident” in the sector.
Fergal O’Brien, Ibec’s director of policy and public affairs, said: “The Irish economy is now in a strong position with employment growing by 2.9% in 2016, the fastest rate since 2007.
However, the economic impact of changes to our trading relations with the US and UK are still unknown and are a cause of concern for Irish businesses
Potential changes to the corporate tax rate in the US is a key concern going forward, given the presence of multinationals in Ireland, O’Brien said.
The potential for the US to introduce a border adjustment tax (BAT) is the biggest worry of all which would be “equivalent to imposing tariffs on imports while subsidising exports”.
He added that: “The US hasn’t been this close to a comprehensive corporate tax reform in decades.”
Ibec concluded by urging the government to take advantage of the current economic growth and impose decisive policy action to protect Ireland from the effects of Brexit.
“Investment and liveability issues such as transport, housing and education must be prioritised before the window of exceptionally cheap money closes any further,” O’Brien said.
Costly business
A new survey of entrepreneurs conducted by EY has said that the increasing cost of doing business in Ireland, and attracting the best workers, were among the biggest challenges they faced.
Almost three-quarters (72%) cited the personal tax burden as the biggest inhibiting factor on the appeal of establishing and growing a business here.
A further 62% said the cost of labour was a major inhibiting factor while 61% said the cost of insurance also played a part.
The high tax burden in Ireland also hampers businesses ability to attract the best talent, according to the EY survey.
Kevin McLoughlin, partner lead at EY entrepreneur of the year, said: “At the moment, entrepreneurs suffer a higher tax burden than those in employment, so this is an area that needs to be tackled head-on by government.
Clearly defining and tackling these issues will be imperative to Ireland’s continued economic growth.
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