THE CENTRAL BANK has raised concerns that the Irish economy could be massively negatively impacted by trade or tax changes Donald Trump could makes when he returns to the White House.

The financial regulator’s director of economics Robert Kelly has said that any major change to tax or trade arrangements by the US would “pretty much instantly put Ireland into quite a significant [budget] deficit – about 3% down to 2027″.

The Central Bank cannot yet quantify the potential scale of the impact, Kelly added, as it’s not yet clear which areas may be hit with tariffs by the incoming President of the United States.

Trump has long suggested that he would introduce a number of large tariffs on the EU and other neighbouring countries, arguing that nations are “ripping off” the US. He has promised to impose sweeping tariffs as soon as he takes office next month.

Some American business owners welcome Trump’s protectionist promises, while others, who trade or import their goods to and from abroad, are concerned.

Meanwhile, international economies are discussing methods to counteract any potential economic shocks.

Last month, Canadian premier Justin Trudeau visited Trump’s Florida residence to try and convince him to hold off on large trade tariffs.

While Ireland’s next Taoiseach may also contemplate a round trip to Mar-a-Lago, Kelly suggests Ireland has more breathing room than other countries.

Kelly said while there is currently a large amount of trade uncertainty, the Irish economy has managed to build a significant buffer in the public finances. This would mean, in short, that any economic shocks would not be immediately felt in Ireland.

But any potential changes on the US side must be met with “immediate action” to change the patterns in day-to-day expenditure or to alter, and likely increase, Irish tax rates to compensate for lost income, Kelly warned.

He detailed that the Irish economy is massively reliant on corporation tax receipts, which return a roughly €15 billion windfall annually.

As a result, the Central Bank has again suggested that the state broaden the tax base to boost revenue from many different areas.

Separately, Kelly said he was of the opinion that most of all windfall tax receipts should, ideally, be put into the state investment funds to protect the delivery of future infrastructure protects, primarily.

According to today’s final Central Bank bulletin, the economy grew 0.5% more than projected in the final quarter of 2024.

Very strong growth in employment and inflation rates falling slightly quicker than expected led to the stronger-than-expected economic report, with the regulators expecting that that momentum will carry over into next year and continue.

Next year will likely see an increase in investment, particularly in housing.

Central Bank estimates, however, suggest that 43,500 homes will be completed by 2027 – lower than what is needed.