Updates from Ibec CEO Danny McCoy

CEO Update: Ireland must stay alert to fast emerging and key EU developments

Friday, 20 February

The latest CEO Update to Ibec membership from Danny McCoy

Dear member,

There are a number of key developments emerging at a European level with the potential for significant consequences for Ireland, which may result in a divergence of views from many of our European counterparts. One particularly divisive issue relates to the so-called "European Preference" to favour EU suppliers. Whilst appearing to be a benign notion of tilting European procurement towards European industries, it has the potential to undermine EU competitiveness, which relies on an open and globally focused business model. Foreign Direct Investment remains a critical pillar for the EU Single Market’s security of supply- particularly across an array of sectors such as pharmaceuticals, healthcare, and digital technology.

The centralising of activity and power towards the centre of Europe and away from the periphery, such as Ireland, is a key development we must be vigilant about. One example is the consolidation of power under the EU Cybersecurity Act 2 (CSA2) at the European Commission in Brussels. This is much broader in scope and impact for multiple sectors beyond digital and AI. Up to 18 sectors- including telecommunications, energy, transport, finance, health, and manufacturing- may be required to enforce supply chain security by removing investment from their systems from so-called “high-risk vendors”. The geopolitical risks and huge costs involved must be front of mind across the entire business community, as these will particularly impact SMEs. Currently, there is an acute lack of awareness regarding the consequences of these developments at all levels of Irish society.

Furthermore, a new "E6" group, consisting of the six largest economies (Germany, France, Italy, Spain, Poland, and the Netherlands), has formed to build momentum on internal capital market reforms through Enhanced Cooperation. We are acutely aware of the potential consequences of larger countries dominating the discussion at the cost of small, open economies like Ireland, especially given our significant international financial services sector. Through our strong presence and influence in Brussels, we will use our platform to ensure that the impact of these rapid developments on Irish businesses is understood and that our positions on key issues are clearly articulated. This was recently demonstrated when Ibec’s Vice President, Maureen Walsh, met with the President of the European Commission, Ursula von der Leyen, in Brussels. During the meeting, she highlighted concerns regarding the preparedness of Irish businesses for the EU Directive on Pay Transparency, noting that a delay in transposition would allow for greater support to ensure full compliance. The directive is currently scheduled to be transposed into Irish law in June- the month before Ireland assumes the EU Presidency.

Ibec also had the opportunity again to highlight our campaign, "Making a Resilient, Competitive EU a Reality: The Business Ambition for Ireland’s EU Presidency," during an appearance before the Oireachtas Committee on European Affairs and in a meeting with Minister James Browne. Ibec emphasised the importance of private investment in delivering critical infrastructure across clean energy, transport, and housing. It is in Ireland’s interest that the Presidency focuses on maintaining a globally competitive tax position and addressing market fragmentation.

There were also two significant domestic government developments this week in which Ibec was heavily involved. For over five years, we have been championing the need to reform and incentivise the investment culture in Ireland (you can read my opinion piece on this topic from last year here). As part of the publication of a new five-year strategy, Financial Services Ireland (FSI) met with the Tánaiste and the Minister for Finance, Simon Harris TD, to discuss these issues. Ibec was pleased to see the impact of our advocacy with the announcement of a plan to introduce a new savings scheme intended to unlock the €170 billion currently held in low-yield bank deposit accounts. You can listen back to RTE’s Morning Ireland here which features an interview with Director of FSI Patricia Callan on their new strategy.

Likewise, Ibec is pleased to see our key recommendations reflected in the Government’s new Digital and AI Strategy, particularly regarding governance, regulatory simplification, and digital infrastructure. These commitments are critical if we are to achieve our 2030 targets for national and EU digital progression. As the cost of training and organisational capacity remain key constraints, strategically unlocking the National Training Fund should spearhead a fundamental shift in workforce development, particularly in advancing digital and AI adoption in business.

Regards,

Danny McCoy

CEO

Ibec