"Masses of foreign investment, bubbling tax revenues, high growth rates: one might think that the Irish must be a very happy people. But they also have reason to complain.
A huge new Intel chip factory recently opened in Ireland. 17 billion euros went into the construction in Leixlip near Dublin, and the American semiconductor manufacturer is creating thousands of jobs. And the chip factory in Leixlip was built without billions of dollars in government subsidies - unlike what Germany promises for the Intel factory in Magdeburg.
Foreign direct investment is enormously important for Ireland's economy, emphasized Prime Minister Leo Varadkar at the opening of the factory.
For forty years, the republic has been attracting a large stream of multinational corporations with its very low corporate tax of just 12.5 percent. Giants such as Amazon, Apple, Google and Meta have set up headquarters in Dublin. Pharmaceutical companies such as Pfizer also have a strong presence on the island.
Companies are attracted not only by the low taxes, but also by the qualified workforce, high technical standards and business-friendly regulations.
Even in the year of the global Corona recession in 2020, Ireland recorded gross domestic product growth of 6 percent, and in 2021 it was even 15 percent - inflated by the profits of digital companies. Last year, economic output increased by 9 percent despite the energy price shock; this year it is expected to be at least 2 percent.
The debt crisis has largely been forgotten
With such rapid growth, Ireland is the great exception among the industrialized countries. Within eight years, corporate tax revenue has tripled to almost 23 billion euros.
Although the new OECD minimum tax rate of 15 percent and other changes from next year will somewhat weaken the attractiveness of the location and income, the impact will be limited.
The debt crisis that necessitated a rescue operation by the IMF and EU ten years ago after the real estate and banking bubble burst is largely forgotten. The austerity measures under “Troika” supervision were very painful. Many scars have now largely healed and debt levels have steadily fallen. The bubbling profit taxes are giving Ireland generous budget surpluses, this year 10 billion euros (1.8 percent of GDP).
Now the government announced in October that it was setting up two sovereign wealth funds that would collect surpluses, as only the rich oil country Norway does in Europe. It wants to set aside 0.8 percent of GDP per year. The “Ireland Future Fund” is intended to collect around 100 billion euros by 2035 as reserves for worse times and for health and pension expenses. There is also a second, smaller fund for infrastructure expansion, energy and climate policy.
Lots of reasons to complain
One would think that the Irish must be a very happy people. On paper they have one of the highest GDP per capita levels, but these numbers are statistically inflated by the included profits of the corporate multinationals. Adjusted gross national income is lower but still significant. However, there are also many reasons to complain in Ireland.
The housing shortage is particularly depressing. Rents are exorbitantly high, especially in Dublin and the surrounding area, and demand exceeds supply. There hasn't been enough construction for years. Strong immigration from abroad - within two decades the population has grown by almost a third to 5.3 million people - has further exacerbated the shortage of living space. Most recently, almost 100,000 Ukrainians and other asylum seekers arrived.
Two thirds of young Irish people under 30 cannot afford to rent and live with their parents.
Owning a home is no longer affordable for many families.
Not everyone in Ireland has benefited from the long-term boom. And parts of the country's infrastructure - be it the narrow highways, overcrowded hospitals or crumbling schools - are stuck in the past.
The dissatisfaction of many Irish people is reflected in the fact that the left-wing, Irish nationalist Sinn Féin has risen sharply to a third in polls.
Sinn Féin lures voters with social policy promises.
Sinn Féin's questionable past as an IRA mouthpiece is scaring fewer and fewer young people. Prime Minister Varadkar's bourgeois coalition is weakening in popularity with voters, and the Greens in government have particularly fallen. From the point of view of many Irish people, high GDP figures, budget surpluses and a future fund are apparently not enough. Above all, there is a lack of concepts as to how the country can get the housing shortage under control through more new construction." [1]
Importantly, most people in Ireland speak English fluently. After the United Kingdom left the European Union, Ireland was left as the only English-speaking country in our vast and rich market. It attracts companies and talents from all over the world, including Lithuania.
1. Irland, die glücklich-unglückliche Insel. Frankfurter Allgemeine Zeitung (online) Frankfurter Allgemeine Zeitung GmbH. Nov 8, 2023. Von Philip Plickert, London
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