CEO Update: Fiscal resilience, European security & trade, and the All-Island workforce
This week, we learned that the State collected a record €84.9 billion in tax during the first ten months of the year, driven by robust income, corporate, and VAT returns. Revenue rose by 10.3 per cent on a like-for-like basis compared to last year. At a time when many of our European neighbours are facing deepening austerity, anticipating a budget surplus of nearly €10 billion next year strongly highlights the ongoing contributions being made by Irish businesses across the country.
However, success brings its own challenges. Ireland faces major bottlenecks in delivering critical public infrastructure to keep pace with rapid population growth, alongside a persistent productivity gap between large international firms and smaller, indigenous domestic businesses. The challenge now must be focused on putting these resources to efficient use to protect Ireland’s long-term prosperity and competitiveness.
A key area of focus must be security and defence. In an address in Riga this week on the EU Competitiveness Agenda, I noted that we can no longer talk about business growth without talking about security. Long-term prosperity is defined by our capacity to withstand systemic disruption. Security and defence are no longer the exclusive preserve of governments. Modern enterprises rely entirely on secure digital networks, transport infrastructure, and stable supply chains. Through deep public-private cooperation we must safeguard our operational environments. Crucially, Ireland has unique contributions to make. While Ireland must protect its own critical infrastructure our strategic contribution to European security can be capability-led rather than focused on traditional heavy defence manufacturing.
By harnessing our world-class strengths in AI, cybersecurity, maritime and underwater sensing, and financial risk management, Ireland can support and drive innovation in dual-use technologies. This allows us to bolster Europe's collective resilience while capitalising on our high-tech ecosystems.
This imperative to build collective resilience must also extend to our economic positioning. As many of our European partners continue to grapple with their own challenges, we are seeing emerging trends of greater isolationism and protectionism from our European neighbours. As centripetal influences take shape Ireland’s influence on the fringes risks being undermined.
As European leaders gather in Dublin next week this presents an opportunity for Ireland to again champion the firm belief that Europe's long-term global influence is not inwards looking. We possess an extraordinary asset: a massive Single Market of 450 million consumers. But we must use it as a springboard not a fortress. With roughly 85% of future global economic growth projected to occur outside the borders of the European Union, securing our long-term resilience requires a proactive, outward-looking trade policy. We cannot retreat behind protectionist walls. A connected Europe is a competitive Europe. In our ongoing support of members in tracking these evolving dynamics, I am delighted to flag the launch of Ibec International Focus, our new insight-led publication designed to help navigate major EU and international policy developments.
Returning to domestic affairs, as the impasse in public sector pay talks continue, Ibec’s position remains the same. While it is reasonable to expect pay increases at or close to the current rate of inflation during what is a relatively standard pay round, we must recognise that structurally linking inflation to wages would be a fundamental mistake.
We are fortunate to possess a functioning public service, a stability many societies currently lack due to challenged public finances. While there is always room for improvement ensuring we do not slide backward is a vital starting point for this process.
Pay must always reflect society's ability to fund it. Sustainable growth in living standards can only be achieved through rising productivity, which is essential for securing the long-term strength of our economy. This is a delicate balance we recognise the Government is actively striving to manage. Ibec strongly encourages all sides to return to talks to find a constructive solution that minimises any further disruption to wider society.
Finally, a reminder about the upcoming launch of our new All-Island Workforce Survey Report, developed in partnership with the Confederation of British Industry Northern Ireland and Hays. The event will take place on Tuesday, 10 November in the Royal Irish Academy.
Drawing on insights from over 1,200 respondents from across the island, this major new report is the most comprehensive assessment of work trends across the all-island economy to date, exploring the opportunities and challenges of unlocking the island’s full economic and commercial potential. You can register for the event here. We hope to see you there.
