The Irish economy has experienced extraordinary growth over the past fifteen years. Consolidating the progress made during the 1990s - characterised as the “Celtic Tiger” phenomenon - it is now one of the world’s most dynamic, open and globalised economies, with extensive external trade and investment links.
Ireland has consistently topped the economic growth tables of the 30-member OECD (Organisation for Economic Cooperation and Development) and has close to full employment. GDP growth in 2007 was 5.3% and average income per head was approximately 145% of the EU average. All indications are that Ireland will continue to perform well in terms of GDP growth.
Ireland’s economic success is generally attributed to its highly educated and flexible workforce; its social partnership model, which involves close cooperation between government, trade unions and employers; government measures to ensure macroeconomic stability and government policies to attract foreign investment; and membership of the EU, which now provides a market of almost 500 million people.
Ireland has a consistent record of prudent fiscal policy with an average Government budget surplus of 1.6% of GDP over the past ten years. The fourth seven-year National Development Plan, which was launched by the Government in January 2007, provides for total capital investment of €100 billion (5.4% of GDP) and current expenditure of €84 billion.
Over the past five years, Irish trade has grown three times faster than total world trade, with over 80% of all manufacturing output in Ireland sold in international markets. In an Economist Intelligence Unit (EIU) survey from 2006, Ireland is ranked as one of the top countries in the world in which to do business. It has developed a strong entrepreneurial culture and has one of the highest rates of new start-up companies in the world.
Ireland is a leading location for Information Communication Technology (ICT), pharmaceuticals and medical devices, and Dublin is one of the fastest growing funds management locations in the world. Ireland is also the centre for digital media in Europe with major multinational companies locating their European headquarters and a range of business support activities here.
Ireland has developed as a knowledge-based economy built on innovation and technology and shaped by the emergence of strong technology-led and export-focused companies. The Government’s 2006 – 2013 strategy for Science, Technology and Innovation emphasises the benefits of international collaboration and places research and development at the heart of Ireland’s economic development. Science Foundation Ireland (SFI) contributes to enhancing research capabilities and skills in Irish Universities, particularly in biotechnology, and information and communications technology.
Ireland receives the top long-term and short-term credit ratings from all four major international credit rating agencies. These are based, in particular, on the strong public finances; the favourable demographic structure and future pension liabilities; a diversified and flexible economy that has attracted sustained foreign direct investment inflows in recent years and achieved the highest growth rate in the EU since 1995; a low debt burden; a high degree of fiscal flexibility, the business-friendly regulatory environment; low taxation levels and a highly educated workforce.
10 Key Facts on the Irish Economy
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There is general agreement among the main political parties on the broad direction of economic and social policy. National programmes involving the Government, trade unions, employers, voluntary organisations and farming representatives acting together as ‘social partners’ have successfully operated over many years to bring about economic and social improvement.
National Development Plan
The National Development Plan 2007-2013, entitled Transforming Ireland - A Better Quality of Life for All, was launched in January 2007. The Plan is the largest and most ambitious investment programme ever proposed for Ireland. It builds on, and consolidates, the achievements of the previous National Development Plan (2000 – 2006) and provides for a total investment of €183.7 billion: €54.7 billion for investment in economic infrastructure; €49.6 billion for social inclusion measures (children, people with disabilities, etc.); €33.6 billion for social infrastructure (housing, health, justice, etc.); €25.8 billion for human capital (schools, training, higher education, etc.), and €20 billion for enterprise, science and innovation.
National Development Plan
Population, Labour Force, and Employment
Reversing decades of decline, Ireland’s population has been steadily increasing since the 1970s, and now stands at over 4.23 million (2007). This is the highest population figure since the census of 1861 when the population is recorded as 4.4 million. Unemployment was 4.6% in June 2007.
Ireland’s accession to the EEC in 1973 was a decisive milestone in opening Ireland to the global economy and reducing its economic dependence on the UK. Since accession, per capita GDP in Ireland has increased from almost 60% of the EU average in 1973 to well over 100% today. Since 1973, the proportion of exports to non-UK destinations has increased from 45% to over 83% today.
Ireland and the Euro
The ease with which Ireland qualified for membership of the Euro in 1999 underlined the dramatic improvement in the country’s economy and public finances. Membership of the Euro was embraced by Ireland’s internationally oriented business community, which viewed it as a logical step in the further integration of European markets and as a boost to Ireland’s credibility as a location for internationally mobile investment.
In May 1998, Ireland, having satisfied entry criteria covering public finances, the exchange rate, the interest rate and inflation, qualified as one of the first round of participants to adopt the new EU currency. Along with 11 other EU Member States, Ireland now participates in Economic and Monetary Union which commenced on 1 January 1999. The Euro was introduced as the unit of currency on 1 Jan 2002.
On 1 January 1999 the Eurosystem, comprising the European Central Bank (ECB) and National Central Banks (NCBs) of the EU Member States which adopted the euro, assumed the task of formulating and implementing the single monetary policy for the euro area. The objective of the single monetary policy is price stability. In order to make the appropriate interest-rate decisions to maintain price stability, the ECB, along with all other major central banks, has a clear and coherent conceptual framework for the policy-making process. This is referred to as the monetary-policy strategy.
Inward investment has been critically important to Ireland’s economic development, providing tens of thousands of jobs, disseminating technological know-how and expertise within the wider economy, linking up with indigenous industry, boosting productivity, and underpinning export growth.
Outward investment by Irish companies has increased noticeably in recent years, albeit from a very low historic base. This emerging trend is consistent with the pattern observed in other economies as they move to higher stages of economic development.
Education and Training
Education and Training is a vital component of Ireland’s knowledge-based economy, and is a priority investment under the National Development Plan. Ireland enjoys one of the best education systems in the world, with approximately 1 million people in full time education.
Innovation and R&D
R+D in Ireland has expanded dramatically in recent years reflecting the Irish government’s massive injection of funding into the sector. Leading global companies have found Ireland to be an excellent location for knowledge-based activities. The young Irish workforce has shown a particular aptitude for the efficient collection, interpretation and dissemination of research information.
Since 2003 Ireland’s corporate tax regime has been fixed at a rate of 12.5%. This applies to all Irish corporate trading profits. A rate of 25% applies to non-trading (passive) income. Existing overseas operations, which were eligible for a 10% rate, will retain entitlement to this rate until the end of the year 2010.
E-Commerce and the New Economy
The Irish government has moved decisively to prepare Ireland for the e-commerce age. Initiatives undertaken include the liberalisation of the telecommunications market, a substantial investment programme in broadband infrastructure and introduction of the most e-commerce friendly regulatory environment in Europe.
Ireland is acknowledged to be one of the most outward looking and open economies in the EU. It is therefore sensitive to changes in the global economy.
There are about 100 State-sponsored bodies in Ireland employing about 57,000 people. They are engaged in a wide variety of activities including transport, energy and the promotion of tourism, trade and industrial development.
During the 1990s the Government privatised certain sectors of the economy including steel and telecommunications. In addition, the Government has liberalised such sectors as air transportation and electricity generation.
There is more information about the State-sponsorded bodies in the Business in Ireland Section.
In 2007 Ireland’s exports amounted to €88.6 billion. In 2006 the principal destinations for Irish exports were: United States 18%, Great Britain 18%, Belgium 14.3%, Germany 7.5% and France 6%. The top five categories of Irish Exports for 2006 were: medical & pharmaceutical products, organic chemicals, office machines & automatic data processing machines, electrical machinery, apparatus & appliances & parts and miscellaneous manufactured articles. In 2006, exports of services were valued at €55 billion.
In 2007, Ireland’s imports were valued at €62.1 billion. The principal sources of imports were Great Britain 30%, United States 11.3%, Germany 9%, China 8% and Netherlands 4.2%. The top five categories of Irish Imports for 2006 were: office machines & automatic data processing machines, electrical machinery, apparatus & appliances & parts, road vehicles (include air-cushion vehicles), miscellaneous manufactured articles and petroleum, petroleum products & related materials. Imports of services were valued at €62 billion, Irelands main services partners were the US, Great Britain, Germany and Italy.
General Government Balance
The Exchequer recorded a surplus of 0.5% of GDP in 2007. The projected budgetary position over the period 2008 - 2009 is for a General Government budget deficit of 0.9% of GDP in 2008 and a deficit of 1.1% of GDP in 2009. The debt-to-GDP ratio will be maintained among the lowest in the euro area – around 28% for the forecast period – in line with the Government’s long-term priorities. The market value of the assets of the National Pensions Reserve Fund is estimated to be €21 billion at end 2007, a sum equivalent to 13% of GNP.
The Industrial sector has a highly skilled technological labour pool. Within this high technology grouping, the most active sectors currently are life sciences, medical and information technology sectors. Many of the world’s leading companies have subsidiaries in Ireland which perform very successfully in comparison to those based in other EU countries.
Three agencies deal with industrial development in Ireland. Forfás provides overall policy advice and co-ordination for enterprise development and science, technology and innovation in Ireland. Enterprise Ireland helps develop Irish-based enterprise with the potential to trade internationally. IDA Ireland, has responsibility for securing new investment in manufacturing and internationally traded services. It also has responsibility to encourage existing Foreign Direct Investors to expand and develop their businesses in Ireland.
There are also a number of regional development agencies such as Shannon Development which was set up in 1959 to promote Shannon International Airport and Údarás na Gaeltachta, which is the regional authority responsible for the economic, social and cultural development of the Gaeltacht (Irish speaking parts of the country).
Foreign Direct Investment
Over 1000 overseas companies have established operations in Ireland. They are a key driver of the economy employing some 135,000 people directly and many more indirectly. They account for one quarter of GDP and over 80% of exports. The focus of IDA Ireland is to attract foreign investment that is of high value, requiring high skill levels and a sophisticated business environment.
Key areas of focus are:
- advanced manufacturing projects in the ICT, pharmaceuticals and biopharmaceuticals, medical technologies, engineering and consumer products sectors
- high value internationally traded services sectors in software, financial services, shared services and customer support activities
Shannon Development has responsibility for the Shannon Free Zone, Ireland's largest cluster of North American investments. There are 110 companies in the free zone employing 7,500 people, with total trade in the zone valued at €2.5 billion.
Irish Enterprise Sector
Enterprise Ireland client companies employ in excess of 141,091 people in Ireland (2006). Total export sales from Enterprise Ireland clients were valued at €11,779 billion in 2006. The key sectors in 2006 for Enterprise Ireland clients in order of exports were Food and Retail, (€7,849 billion), Industrial and Life Sciences, (€2,493 billion ), Software and services, (€1,437 billion). The largest export markets for Enterprise Ireland Clients are Northern Europe (€6,740 billion), Southern Europe (€1,377 billion), America's (€1,299 billion), Germany, Central and Eastern Europe (€849 million), Asia (€654 million), the Rest of the World (€ 154 million).
Údarás na Gaeltachta supports businesses in developing new markets, technologies, products and strategic alliances through research and development. Gaeltacht companies span a range of commercial sectors, including tourism, fish processing and aquaculture, renewable energy, food, life sciences, ICT, niche manufacturing, audio visual and digital media, arts and crafts. Over 12,000 people are employed in Údarás na Gaeltachta client companies.
InterTradeIreland is a North/South Implementation Body established in 1999 pursuant to the Good Friday Agreement, promotes trade and business on an all-island and cross-border basis, and works to enhance the global competitiveness of the all-island economy to the mutual benefit of Ireland and Northern Ireland.
Dublin's International Financial Services Centre (IFSC), which was set up by the Irish Government with EU approval in 1987, is globally recognised as a leading location for a range of internationally traded financial services, including banking, asset financing, fund management, corporate treasury management, investment management, custody and administration and specialized insurance operations.
More than 430 international operations are approved to trade in the IFSC, while a further 700 managed entities are approved to carry on business under the IFSC programme. The centre is host to half of the world's top 50 banks and to half of the top 20 insurance companies. It is expected that the International Financial Services Centre will continue to make a major contribution to Ireland and the goal of policy is to ensure that we will continue to attract new operations and provide a supportive business environment for this important sector.
The service sector in Ireland accounts for over half of GDP and for 65 per cent of employment. Throughout the last decade output of services has grown strongly, largely as a result of growth in financial services, telecommunications and tourism.
Over 50 per cent of the employee labour force are organised in trade unions of which there are 50 in Ireland. The Irish Congress of Trade Unions is the national co-ordinating body for most of these. The Irish Business and Employers Confederation represents the interests of employers at national level.
The Labour Relations Commission and the Labour Court are the principal mediation bodies. Their role is to assist in the settlement of disputes.
The Agri-Food industry makes a significant contribution to the Irish economy. The combined agri-food and drink sector had exports of over €8 billion in 2006 and accounts for almost 9% of GDP and directly employs 166,000 people. In particular, the industry plays a major role in the indigenous sector, with approximately 50% of exports from Irish owned companies deriving from agri-food and drink companies. The linkage of the agri-food sector to the rest of the economy is exceptionally high and, given its low import content, the sector currently contributes in the order of 20% to net foreign earnings from merchandise exports.
Of the total land area of approximately 7 million hectares (17 million acres), 5 million hectares (12.32 million acres) are utilised for agricultural purposes (including forestry). Cattle-raising and dairying are by far the most important sectors of the agricultural industry, and livestock (mainly cattle) and livestock products (principally milk), account for 76 per cent of the value of gross agricultural output. The main crops are barley, wheat, potatoes and mushrooms.
The Irish seafood industry provides employment for over 15,000 people. It makes a significant contribution to the economic and social fabric of the many small communities located in mainly rural areas or small towns and villages around the 7,500 kilometres of our coastline.
Total Irish sales of seafood in 2007 on the home and export markets amounted to €803 million which represents an increase of 9% on the previous year. The main contributor to the growth in revenue was the ongoing rapid growth of the domestic market with seafood sales to the retail sector valued at €169 million, up by 7% on 2006 and sales to food service valued at €213 million, an increase of 5%. The increase in sales was mainly driven by the growing consumer awareness of the health and nutritional benefits of seafood.
Approximately half of the increase in domestic seafood sales was met through increased imports which grew by 16% to reach €144 million in 2006. In contrast, export sales were up by a mere 2% to reach €362.2 million. This was the result of sharply opposite trends with pelagic fish exports (e.g. mackerel) falling by 27% (€78.8 million) while increased exports were recorded for all other categories, the most notable being the increase of 16% in shellfish exports (€147 million).
In 2007, overseas tourist visits to the whole island of Ireland increased by more than 4% to 9.1 million, a new record. These increases in visitor numbers, and the associated growth in tourist spending, have provided the foundations on which the tourism industry’s enhanced contribution to the national economy has been built. Expenditure by visitors to Ireland, both North and South, is estimated to be worth €4.5 billion in 2007. It is estimated that the total number of people employed in the Irish tourism and catering industry in 2007 was over 230,000. The industry is Ireland’s biggest indigenous employer and is a major contributor to the Irish economy. Allowing for indirect and induced effects, tourism accounted for 3.8% of GNP in 2007.
Tourism Ireland was established under the framework of the Belfast Agreement of Good Friday 1998 to co-ordinate the work of the two tourist boards on the island, Fáilte Ireland and the Northern Ireland Tourist Board, who are responsible for product and enterprise development and marketing to tourism consumers within the island of Ireland.
Ireland’s successful tourism industry is built around the three themes: Irish people; Irish culture and the physical beauty of the country. The people of Ireland are recognised for being friendly, charming and witty. They are attentive but relaxed and welcoming. These characteristics allow our visitors to interact easily with local people and connect with the island on a human level. Culture on the island of Ireland reflects the character of its people and the beauty of its landscape and historic sites. Visitors can vary the pace of their holiday experience, from a relaxed appreciation of the historic culture to a more active involvement in the vibrant living culture. Ireland is also celebrated as a rich tapestry of breathtaking landscapes and seascapes steeped in history creates a varied experience for the visitor, all within easy reach. It is an experience that fills the senses – an energising journey of discovery and enrichment
Coras Iompair Éireann (CIE) is the national statutory public transport service in Ireland. The CIE group of companies comprises a holding company and three subsidiary operating companies which provide train, bus, coach and ancillary services throughout the country. Iarnród Éireann (Irish Rail) operates the nationwide mainline rail services, the Dublin Area Rapid Transport (DART) and other suburban rail services as well as rail freight services. Bus Éireann (Irish Bus) operates a comprehensive network of bus services outside Dublin City, including expressway inter-urban coach services; city buses in Cork, Galway, Limerick and Waterford; rural bus services; and international services. Bus Átha Cliath (Dublin Bus) operates urban bus services in the greater Dublin area. The latest addition to the country’s public transport system came with the opening of the Luas lines in 2004. Luas is a Light Rail Transit (LRT) system (a public transport tram system) that operates in Dublin.
An integrated transport system for Dublin, to include seven new Luas projects, two Metro lines, an underground station at St. Stephen's Green integrating all services and the Western Rail Corridor are among the investments outlined in Transport 21, the Government's €34.4 billion transport investment plan.
There is a significant investment programme underway upgrading the national roads system. More than €16 billion is being spent improving the inter-urban motorway network. This is undertaken by the National Roads Authority.
The majority of passengers visiting Ireland use one of the main airports - Dublin, Shannon and Cork. There are also a number of regional airports throughout the country. Dublin Airport is Ireland's busiest airport and is also amongst the ten busiest airports in Europe. Dublin Airport manages an average of 60,000 passengers per day, rising to 80,000 during the peak season, and more than 600 aircrafts movements every day. The Dublin Airport Authority is investing €2 billion in new and improved facilities in the airport.
The Government’s Energy Policy Framework for the period 2007-2020 was published in March 2007. The policy aims to deliver a sustainable energy future for Ireland. Although Ireland faces similar energy challenges to those being confronted worldwide, the Irish situation is made more acute by our small energy market, peripherality and limited indigenous fuel resources. Sustained economic growth and population growth also add to the challenges for Irish energy policy. There are however major opportunities to be realised in harnessing the full potential of Ireland’s renewable and bioenergy resources.
The National Development Plan 2007-2013 will see some €8.5billion in investment in energy, funded in part by the Exchequer, by the Semi-State Energy Bodies and from other non-public sources.
While Ireland is totally dependent on imports for its oil supply, the proportion of primary energy derived from oil has been reduced significantly in the last decade in line with EU policy.
Ireland has a largely stand-alone electricity grid. An electricity interconnector with Northern Ireland was re-commissioned in 1995 and is used to optimise peak demand management. Electricity demand has continued to rise, however, and a major task for the electricity industry is to increase generation resources in line with electricity demand.
There has been close cooperation with Northern Ireland on energy issues over the past few years. A key outcome was the joint publication of the All-island Energy Market Development Framework in November 2004. The Framework sets out the commitment of both Governments to achieving a single energy market.
The Electricity Supply Board (ESB) is the State-owned generator and distributor of electricity. From 2000, under an EU Directive, the electricity market is open to competition. The Commission for Electricity Regulation, established in 1999, licences the generation and supply of electricity.
Natural gas from Irish offshore fields is making an important contribution towards energy requirements. Bord Gáis Éireann (the Gas Supply Board) is a State-owned company responsible for the supply, transmission and distribution of natural gas. It operates transmission lines bringing gas from Kinsale Head, off the coast of Cork, and from the North Sea gas fields through a sub-sea interconnector pipeline. Among new pipelines being added is a major east/west gas pipeline to Galway.
Peat development in Ireland is undertaken by a State enterprise, Bórd na Móna (Peat Development Board), which has been a world leader in exploitation techniques. Ireland has one of the world’s highest levels of peat output.
Mining and Quarrying
Ireland is a leading producer of zinc and lead. There are three underground mines, Navan, Co. Meath, Lisheen, Co. Tipperary, and Galmoy, Co. Kilkenny.
The three mines together account for approximately 40% of Western European zinc metal, and 30% of its lead, all of which is exported as concentrates. Ireland is also a significant producer of gypsum, from an open-cast mine at Knocknacran, Co. Monaghan. The gypsum is used in Ireland’s building industry, with some being exported.
The Department of Communications, Energy and Natural Resources is responsible for policy and regulation of mineral exploration and mining. The Department is also charged with promotion of exploration and development of Ireland’s minerals. On a day-to-day basis, these responsibilities are dealt with by the Department’s Exploration and Mining Division (EMD). EMD maintain two websites, one of which is aimed at industry (www.minex.ie) and the other is for the general public (www.emd.ie).
Ireland also has a significant quarrying industry, producing sand, gravel and aggregate for the construction sector, and ground limestone for agriculture. Quarrying is regulated by local authorities.
The Communications Regulator (ComReg) is the statutory body responsible for the regulation of the electronic communications sector (telecommunications, radio communications and broadcasting transmission) and the postal sector.
Electronic communications in Ireland are among the most advanced and sophisticated in Europe. Major providers of telecommunications services include Eircom, BT, Vodafone, O2, Meteor and 3 Ireland. Eircom, the principal provider of fixed line telecommunication services was formerly a State-owned company, Telecom Éireann. In line with EU policy the telecommunications market in Ireland was fully liberalised in 1998 and Telecom Éireann was privatised in 1999. The organisation which manages the roll out of broadband on behalf of the State in Ireland’s regional towns and cities is E-Net. There is also a State-run telecommunications network, HEAnet dedicated to linking the third level institutions.
The Irish Government, by a combination of imaginative legislation, high-quality infrastructure and favourable tax treatment, is promoting Ireland as an e-commerce hub. The Electronic Commerce Act, which came into force in 2000, signalled a flexible approach to regulation and created equivalence in law between electronic documents, contracts, signatures and seals and their paper-based equivalents.
Ireland has major international fibre-optic connectivity. As part of its policy of regionalisation, the Government has spent €65 million providing high speed broadband connectivity to 26 principal towns around the country. A further 90+ towns are currently being prepared for phase two of this project.
The Government is also supportive of the creation of a North/South digital corridor and the provision of satellite-based broadband services aimed at remote areas of the country. There is also a commitment to ensure that every primary and secondary school in the country will have broadband connectivity.
Newspapers have been published in Ireland for over 300 years. The main morning daily broadsheet papers are The Irish Independent, The Irish Times and The Irish Examiner. There are also two evening newspapers, The Evening Herald and The Evening Echo and six Sunday newspapers, The Sunday Tribune, The Sunday Independent, The Sunday World, The Sunday Business Post, Irish Daily Mail on Sunday and The Star on Sunday. There are two Irish language weekly newspapers: Lá and Foinse.
There are also about 60 local newspapers usually published weekly and a wide variety of magazines dealing with current affairs, economic issues and leisure interests. British newspapers and magazines circulate widely in Ireland and some titles publish separate Irish editions.
In 2007 the Press Council of Ireland was established by the Industry itself and in the same year the Government established the Office of Press Ombudsman. Their main objectives are:
- to provide the public with an independent forum for resolving complaints against the press;
- to resolve all complaints quickly, amicably and free of charge;
- to maintain the high standards of Irish journalism and journalistic ethics;
- to defend the freedom of the press and the freedom of the public to be informed.
Radio and Television
The National radio and television service is operated by Radio Telefís Éireann (RTÉ), the public broadcasting company which transmits on two television and five radio channels. RTÉ derives its revenue from licence fees and the sale of advertising time. In addition to the wide availability of British radio and television programming, satellite broadcasts are achieving an increasing audience.
Irish speakers are served by a dedicated radio channel, Radio na Gaeltachta (operated by RTÉ) and by TG4, an independent Irish language television channel.
The Radio and Television Act 1988 established the Broadcasting Commission of Ireland (formally the Independent Radio and Television Commission), which has responsibility for licensing and overseeing the operation of independent radio and television broadcasting. In recent years, quite a number of independent regional radio stations and community radio initiatives have emerged all over the country and have gained a substantial audience. There are two national independent radio stations, Today FM and Newstalk, and a national independent commercial television station, TV3. Both Today FM and TV3 were launched in 1998. Newstalk was launched nationally in September 2006.
Department of Finance
International Financial Services Centre
National Treasury Management Agency