Geoeconomics with Ireland at its centre this week
Another busy week on many fronts, covering:
1. National Economic Recovery Plan
2. Commission on Taxation and Welfare
3. G7 Corporate Tax Discussions
4. Experience Economy Reopening
5. BusinessEurope Council of Presidents Event
With excellent engagement and insight from across our membership, Ibec has worked hard on a number of developments which we have seen come to fruition this week in the form of the publication of the National Economic Recovery Plan and the commencement of the Commission on Taxation and Social Welfare.
Ibec sought the establishment of the Commission in its 2020 General Election campaign to introduce a coherent and sustainable tax and welfare system, one which allows us to underpin the transition of the Irish business to a model of sustainable substance. By appointment of the Minister for Finance, Fergal O’Brien, Ibec’s Director of Lobbying and Influence, took his seat around the Commission table this morning for its first meeting. On its agenda are proposals to move to a European style Social Insurance model where unemployment benefits are linked to previous PRSI contributions.
While Ireland does not constitute a G7 country, in his capacity as President of the Eurogroup, Minister Donohoe will be in attendance during pivotal meetings of Finance Ministers over the weekend for discussions on corporate tax reform as well as on climate related initiatives. Ireland’s latest economic data for Q1 2021 provides an interesting backdrop with strong export growth driving GDP growth of 11.8% year-on-year, despite falls in both personal spending and investment amid the lockdown of the first months of the year.
This rapid growth is not without its own challenges, with data released earlier in the week showing rising earnings and labour costs for those in their jobs since Covid hit. Combined with a take-off in demand amid the economic reopening, the impact on costs and margin compression will need to be monitored closely, as supply struggles to keep up.
Many businesses operating within the Experience Economy will relaunch next week and their transition will be supported by the Economic Recovery Plan, much of which Ibec has shaped. This will be an important framework in the months ahead. So too is the European investment money but this will be dwarfed by the investment expected in the upcoming review of the National Development Plan which many of you have engaged with us on influencing in the previous months. A strong plan for the future is important but the capacity to deliver both in terms of costs and labour will now be the challenge.
We also continue to shape a diverse and shared agenda internationally with business leaders and key decision makers through BusinessEurope. This week, represented by Ibec President Alastair Blair, Accenture, the BusinessEurope Council of Presidents met under the Slovenian presidency to discuss Covid recovery strategies, international travel coordination, Brexit fallout, digitalisation and data, trade relations with the USA and concerns on fair competition from China and cyber security threat. The standout issue from conversation with European Commission Vice President Dombrovski was the environmental agenda, Fit for 55 as it relates to 55% greenhouse gas emission reductions by 2030. These targets could be significant constraints on growth potential in the short term for the EU but specifically Ireland given over extraordinary growth. I spoke about this challenge with Dr Marie Donnelly, Chair of the Climate Change Advisory Council in the latest episode of Ibec Voices this week.
There are a number of opportunities to engage on global developments in the coming weeks through Ibec events and in particular you might like to register to attend a conversation with OECD Chief Economist Laurence Boone on 17 June, and for a timely discussion on US workforce trends and collectivism we are hosting a conversation with the Honourable Martin J Walsh, United States Secretary of Labor on June 18.
Wishing you and your family a very enjoyable long weekend.