Irish economy in good shape but challenges ahead

If we thought the years 2020 and 2021 had been difficult for the economy due to the Covid-19 pandemic, the year 2022 has demonstrated even more challenges, volatility and unpredictability, with a mixture of war, back to price inflation and a plethora of energy crises.

This combination of economic headwinds has raised considerable concerns about how the government should manage the public purse.

I must both support those most affected by rising price inflation, while avoiding overspending on government spending commitments and increasing the future tax burden.

Tough times indeed.

Challenges

In this context, there has been much discussion about the key role that the corporate tax revenues of a relatively small number of multinational corporations play in creating the “cream” at the top of corporate tax revenues. Irish economy.

As shown in the table below, corporate tax revenue has almost doubled since 2016 and the forecast for 2022 is for a final annual total of almost €17 billion compared to €7.3 billion. euros in 2016.

Source: Revenue Ireland

Although much has been said about the increase in corporate tax, it is very clear that the overall tax levy of almost 70 billion euros depends on much more than the activity of the multinational sector alone.

Indeed, a recent report by Enterprise Ireland highlighted the contribution of local businesses, and in particular those in the food and drink sector.

  • 2021 was the highest level of growth on record for Enterprise Ireland – businesses sustained in export value;
  • Exports increased across all territories, with exports to the Eurozone up 10%;
  • Last year, Enterprise Ireland customers contributed €31 billion to the national economy;
  • Food exports increased by 6%, representing more than 12.91 billion euros or nearly 50% of total exports.

So while corporation tax provides the ‘cream’ in terms of the national tax levy and multinationals play a key role in enforcing recent increases, the Irish economy needs all its moving parts to work an optimal level if we are to successfully manage the multi-aspect challenges of inflation, war and energy price spikes.

Agri-food contribution

For those of us involved in the agribusiness sector, it is perhaps no longer so surprising, but still disappointing, that the national debate on the Irish economy largely ignores the agribusiness sector and indigenous industry.

Despite the reality, when it comes to setting the budget needed to meet today’s economic challenges, that the real size of the Irish economy is around half of our official gross domestic product (GDP) of £320 billion. Euros, much of the “business economics” narrative continues to focus on companies whose future direction will be decided in boardrooms across the United States and elsewhere.

This while also ignoring the performance and impact of domestic companies whose performance actually has a greater impact and contribution to the total €70 billion in tax collected in the Irish economy.

Let’s be clear: All parts of the Irish, indigenous, agribusiness and multinational economy are important and much needed to keep economic activity at a level necessary to manage economic headwinds.

And yet, adding to the challenge of highlighting the continued relevance of the agri-food sector to the modern Irish economy, the environmental lobby has argued that cutting out Ireland’s agricultural sector is key to delivering on Ireland’s environmental commitments. of climate action.

One has the feeling that this obsession with reduced agricultural production is not only indifferent to the economic impact of this suppression of agriculture, but that in this light, even if we will be collectively poorer, we will be cleaner their eyes.

This elitist nonsense is being denounced right now in the various discussions and presentations on national and sectoral carbon budgets.

The agri-food sector supports 260,000 jobs; 15 billion euros of exports; and €16 billion spent in the Irish economy.

In this context, it is to be hoped that in addition to a well-informed assessment of the unique impact of the agri-food sector, the key issues of carbon leakage, the protection of food production, as well as the government’s commitment to The Climate Action Bill to address “the particular economic and social role of agriculture, given the distinct characteristics of biogenic methane,” is also recognized.

Comments are closed.