Ireland ranked third-most competitive country in the euro area
Ireland ranked third-most competitive country in the euro area
Latest IMD rankings highlight Ireland’s improved fiscal position and ability to attract investment
By Eoin Burke-Kennedy, The Irish Times
Ireland is the third most competitive country in the euro area and the 11th most competitive economy in the world, an improvement from 13th position last year, according to the latest IMD World Competitiveness Rankings.
The index of 63 countries, compiled by the IMD business school in Lausanne, Switzerland, is acknowledged as one of the most reputable measures of global competitiveness.
The 2022 edition of the report said Ireland’s improved fiscal position, ability to attract investment, and strong recovery of the labour market have contributed to the rise in international competitiveness.
This improvement is reflected in a range of metrics, notably economic growth and increased employment.
However, the report noted that Ireland’s poor performance in technological infrastructure indicators remained a concern in the context of the growing importance of the digital economy and also of remote working.
Ireland has improved its ranking from 2021 in two out of the four core pillars of competitiveness assessed by the IMD: Economic Performance, 7th (up from 22nd), Government Efficiency, 11th (up from 13th), while the Business Efficiency pillar remained unchanged at 11th. Ireland’s ranking in the Infrastructure pillar deteriorated from 20th in 2021 to 23rd in 2022.
This year’s report also highlighted the presence of global pressures impacting prices, with consumer price inflation listed as the biggest contributing factor to the deterioration of the overall performance of Ireland’s economy. Other challenges facing the Irish economy included capacity constraints in housing, other infrastructure, and the construction sector, as well as the availability of talent to meet critical skills gaps.
As the most digitally advanced country in the world, Denmark claimed the top spot globally for the first time, pushing Switzerland down to 2nd place. Singapore, Sweden and Hong Kong follow in 3rd, 4th and 5th position respectively.
According to IMD, this year’s results reflect the negative effects of inflationary pressures on businesses and thus on economic competitiveness.
Besides inflationary pressures, other global challenges include Covid-19 variants, differing national pandemic policies and the invasion of Ukraine by Russia, said World Competitiveness Center chief economist Christos Cabolis.
The National Competitiveness and Productivity Council (NCPC) welcomed Ireland’s result but cautioned against complacency.
“We should be pleased with the findings of the IMD’s Competitiveness Yearbook which showcases our improving competitiveness in an international context,” said chair of the NCPC Frances Ruane said.
“However, we cannot be complacent and staying competitive must remain a constant focus for Government and enterprises alike. Urgently improving the key foundations of Ireland’s competitiveness performance is a vital response to the challenges presented by current challenges such as cost pressures, trade disruption, supply chain issues and infrastructural deficits. Improving competitiveness and increasing productivity are essential to ensuring businesses in Ireland can compete successfully in international markets and protect the resilience of the Irish economy throughout the economic cycle,” she said.
(This article first appeared in The Irish Times and has been reproduced here by kind permission)
On 22 March, the President of the Ireland-Canada Chamber of Commerce Paul Dunne met with Senior Trade Commissioner, Susanne Drisdelle, and Trade Commissioner, Meena Bhullar, at the Canadian Embassy in Dublin to discuss a wide range of topics of interest to our members.
Role of Canada’s Trade Commissioners in Ireland
Canada’s Embassy in Dublin represents Canadian interests in the Republic of Ireland. The
Trade Commissioners work closely with their colleagues at the High Commission of
Canada in the United Kingdom (based in London) to respond to enquiries from Canada on doing business in Northern Ireland.. It should be noted that the ICCC is mandated to cover the full island of Ireland and, as such, we maintain close links to the governments and trade organizations of both Ireland and the UK.
Ms. Drisdelle and Ms. Bhullar contrasted their mission with that of the Irish Government’s Industrial Development Authority (IDA Ireland) and Enterprise Ireland. They provided an overview of the Canadian Trade Commissioner Service, which attracts Canadian companies to Ireland and assists them by providing market intelligence and establishing “quality contacts” – primarily leads or customers for their products and services. While IDA Ireland, by contrast, supports Canadian companies looking to open their offices in Ireland, with the objective of maximizing job creation in Ireland. These two agencies work closely together to support Canadian companies looking to expand into Ireland and, more broadly, into the EU.
Common Travel Area (CTA)
Mr. Dunne and the Trade Commissioners discussed a lesser-known advantage of choosing Ireland as an investment destination. Uniquely among EU countries, Ireland enjoys the benefits of the CTA, which effectively permits visa-free travel between the UK and Ireland and authorizes citizens of each country to live, work, have access to each other’s welfare and health systems and even vote in elections. This broadens the labor pool which, along with the English language and low tax rates, makes Ireland an extremely attractive investment destination in Europe.
CanExport Assistance to SMEs
They also discussed the CanExport program which may be of interest to many of our members. The program provides grants of up to $50,000 to Small and Medium Enterprises (SMEs), defined as having up to 500 employees and between CAD$100,000-$100m in revenues, for export development expenses under the categories of travel, trade events, marketing, interpretation, contract assistance, tax and legal advice and more. On this topic, the Chamber intends to go into greater depth later this year by publishing an article on it for our members.
Mr. Dunne said: “Overall, this was an excellent and very productive meeting at the Canadian Embassy. The trade commissioners are very aware of our role as a Chamber, appreciative of our contribution to the trade relations between Ireland and Canada, and ready to support us in many of our activities. I wish to thank them for the time they took to meet with us – the intention is to arrange similar meetings with them again in the future, as well as other organizations and individuals who can help advance the endeavors of our members.”
By Dr. Eamonn McKee, Ireland’s Ambassador to Canada
‘Both countries are on journeys of reconciliation, approaching the problems of today that have their roots in the past’
All diplomats work within a bilateral environment defined by politics. Those political narratives tend to have a long narrative arc. What’s fascinating about the Irish-Canadian relationship is that we’re living through a shift in that narrative. That shift points to a bright future.
Since it’s my job to promote good relations, your response might be, “Well, he would say that, wouldn’t he.” I have a strong case, however, and can point to three specific events that shifted our narrative, namely 1867, 1916, and 2011.
No prizes for any Canadian who knows the significance of 1867. It was the year of Confederation, when Canada became a nation with its own Parliament. Albeit under the English Crown, Canada was led to this point by the founding fathers, chief among them Irishman Thomas D’Arcy McGee, a passionate advocate of Canadian nationalism…
Trade News – Update from the Irish Embassy to Canada
The ICCC has received an excellent update from the Embassy of Ireland, which we are pleased to share below. The update includes sections on CETA, Brexit, the state of the Irish economy and the OECD International Tax Agreement. In particular, the Chamber would like to welcome the arrival in Canada of the Embassy’s new Second Secretary, Sally Bourne, who joins the team in Ottawa on a three-year tour of duty. We would also like to thank Anderson Finlay for all his hard work, congratulate him on his promotion and wish him all the best in the Human Rights Unit at the Department of Foreign Affairs in Dublin.
1.Embassy update
August saw the Embassy welcome our new Second Secretary, Sally Bourne. Sally brings a wealth of experience from her previous role in the Passport Office in Dublin and joins the team for the next three years. She takes over from Anderson Finlay who has gone back to our Human Rights Unit in HQ having been promoted.
The Embassy has seen a modest return to smaller meetings with partners over the last number of months, though lingering COVID restrictions have tempered our ambition somewhat. That being said, Ambassador McKee did manage his first official in-person visit to Vancouver in September. This included a very successful business breakfast hosted by our Chamber in Vancouver, along with a number of other high-level meetings. Another visit is planned for early November to Toronto and we hope to cover all areas represented by our Chambers in the not too distant future.
Over the summer, we ran a number of successful events, including our annual Bloomsday celebration, and more recently Ambassador McKee spoke at the annual Valentia lecture. We were also thrilled to support the Pan-Canadian Chamber event featuring Irish Foreign Minister Simon Coveney in June. Congratulations to all concerned on what was a very worthwhile and excellently executed online event.
Our political outreach continued apace, and we were very pleased to help facilitate meetings between the Canada-Ireland Inter-Parliamentary Friendship Group and its counterpart in Dublin, with James Maloney MP continuing his leadership as Chair.
Looking forward, the Embassy is embarking on a long-term ‘Four Valleys Mapping Project’, which aims to map out Irish heritage along the Gatineau, Rideau, Ottawa and St Lawrence valleys. If anyone has any historical or contemporary information they can pass on in that regard, please do not hesitate to get in touch. This is an ambitious project that we are certain will help us forge even deeper people-to-people ties between Ireland and Canada.
2. CETA update
As you may be aware, Ireland’s ratification of CETA was challenged in a High Court case brought by Green Party TD Patrick Costello. In September, the High Court delivered its judgment, rejecting the plaintiff’s arguments that ratification of CETA by Ireland would necessitate a referendum as it does not represent an unconstitutional transfer of legislative or judicial power. While separate proceedings have also been taken by Sinn Féin Senator Lynn Boylan, the legal arguments made are very largely the same. However, Senator Lynn Boylan has confirmed that she wishes to proceed with her case notwithstanding the High Court’s rejection of the arguments in Costello, on the basis that her proceedings involve different legal issues that may result in a different outcome.
3. Brexit update
On 13 October, the European Commission produced far-reaching proposals based on the concerns of the people of Northern Ireland and addressing the practical, genuine issues that matter most to them. These proposals follow months of careful listening across the political spectrum in Northern Ireland and with the business and citizens most impacted. Where challenges were identified, the EU found creative, credible and durable solutions. The Commission’s package respects the fine balance at the heart of the Protocol: protecting the Good Friday agreement, avoiding a hard border on the island of Ireland while at the same time protecting EU consumers and the integrity of the EU’s single market.
The proposals within the package make it easier for goods and medicines to move between Great Britain and Northern Ireland. The new customs and SPS provisions could reduce SPS checks and controls by about 80%. They will also cut in half the checks, controls and documentation currently needed for goods moving from GB to Northern Ireland. For example, if a truck carries 100 different food products (dairy, meat fish vegetables etc.), it will now only need one certificate to cover the entire load instead of 100. This reduction for groupage loads was a specific ask of traders.
These bespoke solutions make it easier for Northern Irish businesses to move goods into Northern Ireland while at the same time continuing to benefit from all the advantages of full access to the EU single market. The EU is also proposing an unprecedented role for NI political representatives and stakeholders in the Protocol ensuring that the voices of people in NI are heard. These proposals represent a real opportunity for Northern Ireland, especially those in the business community that see the very real opportunities presented by the Protocol.
The ball is now in the UK Government’s court to consider the proposals and to hopefully engage positively and constructively with the European Commission.
4. Irish economy
The Irish economy has shown remarkable resilience throughout the Covid-19 pandemic. The economic recovery is gathering momentum as the vaccine programme progresses rapidly, while structural strengths (e.g. business environment, demographics, talent) and capital investment plans have positioned the economy well for future growth.
In GDP terms, Ireland was one of the best performing economies in the world in 2020. A sharp decline in domestic demand and consumption was offset by the resilience of key sectors, including the vital exporting activities of multinational companies.
Companies supported by Enterprise Ireland recorded €25.48bn in exports in 2020, an increase of 0.3% on the previous year, revealing a positive outlook for Irish exporters and an anticipated boost of up to 8% in export sales by the end of 2021, based on economies around the world recovering from Covid-19.
Export sales to North America and the Asia-Pacific region held up well, falling by just 1% in each case, to sales of €4.46bn and €2.14bn, respectively (although exports to Canada grew +1%). While the UK remains Ireland’s largest export market, it contracted by 3.8% in 2020. The UK now accounts for 29% of total exports, down from 40% 10 years ago but still accounting for €7.51bn now versus €5.5bn at that time. The main sectors of growth were construction, up 12% to €2.51bn; consumer retail, up 6.1% to €989m; and fintech, up 2% to €658m. Food grew by 0.6% to €12.17bn in export sales.
In the first half of 2021, Enterprise Ireland saw positive signs of growth:
– 585 new contract wins, a 14% increase compared to the same period in 2020;
– 173 new client overseas presences;
– A doubling of engagement with companies looking to export into the Eurozone rising from 108 in the first five months of 2020 to 247 for the same period this year;
– 2,365 virtual meetings between Irish exporters and international buyers.
Enterprise Ireland has also recommenced its programme of in-market trade missions from September to the UK, Eurozone, North America and the Middle East, including a North American Trade Mission (including Toronto and Montreal) by Minister of state for Trade Promotion, Robert Troy T.D., in November.
The IDA meanwhile revealed figures that showed Ireland won 142 FDI investments in H1 2020, up 8% on same period last year and close to pre-pandemic levels. The IDA’s new strategy is well-placed to support continued growth and transformation of FDI in Ireland to 2024.
Employment in multinational companies supported by IDA grew by 3.6% in 2020, and IDA’s mid-year results show a strong flow of FDI into Ireland in first half of 2021, in line with that of 2019.
Finally, it was revealed that Ireland has the joint highest life satisfaction in the EU, and the 2nd highest quality of life in the world according to the UN Human Development Index (HDI). This is supported by Project Ireland 2040, a long-term spatial strategy, which includes major focus on quality of life. Ireland is also developing a Well-being Framework to better monitor and measure quality of life in Ireland as part of the policymaking process.
5. OECD International Tax Agreement
Earlier this month, the Government approved Ireland joining the international consensus on a suite of far reaching reforms to the global corporate taxation framework arising from the latest round of discussions at the OECD. Ireland’s focus was on securing the necessary changes to provide certainty and stability in the revised framework and to ensure that our strategic interests were protected.
Joining this agreement is a serious and significant decision for the next stage of Ireland’s industrial policy. It is a sensible and pragmatic decision which will provide the conditions to provide long term certainty for business and investors across Ireland.
While this consensus amongst countries at the OECD is an important step towards the implementation of a new international tax framework, and Ireland’s decision will bring renewed momentum to the process, there is much technical work to take place on the new model framework.
Ireland was not in a position to sign up to the interim agreement in July as there were important issues that needed to be resolved, not least in respect to the minimum effective tax rate proposed of ‘at least 15%’ noting the desire of some countries to seek higher rates.
The agreement now provides that the minimum effective rate for those companies in the scope of the agreement will be 15%. Importantly Ireland has secured the removal of ‘at least’ in the OECD text. Importantly also, the agreement will continue to allow our tax system to support innovation and growth including through the use of R&D tax credits.
The agreement will allow for the retention of our statutory 12.5% rate for businesses with annual revenues of less than €750million. This will mean that there will be no increase in the corporate tax rate for one hundred and sixty thousand businesses representing approximately 1.8 million employees.
There will still be a cost to the Exchequer arising from the agreement. While the final cost is very difficult to predict the Department of Finance and the Revenue Commissioners have estimated that it will be up to €2 billion annually. This must also be considered in the context of strong growth in corporation tax receipts over recent years. While this is a significant cost to the Exchequer, staying outside such an international agreement would arguably have had a far higher cost in terms of our international reputation, would have led to business uncertainty, and risk our attractiveness as a prime location for multinational investment.
This article first appeared in the Sunday Business Post on 8 October.
The benefits and opportunities presented by the trade deal with Canada should be embraced
By Kate Hickey, ICBA
It’s remarkable that even as they were striding through the door marked Hard Brexit, the UK government made sure to sign-up to one final, huge EU project and ratify the Comprehensive Economic Trade Agreement (Ceta).
It’s even more remarkable that the UK has ratified this momentous deal before Ireland, the only English-speaking country left in the EU and an increasingly dynamic trading partner with Canada.
The British, along with most of the major EU countries, have always looked at the big picture on the Comprehensive Economic Trade Agreement between Europe and Canada.
Even as the UK sought a complete break with Europe, its leaders signed up to Ceta in the hopes that it would be the easily copied blueprint for a Brexit version.
This second, interim deal was signed in mid-March of this year, allowing for virtually tariff-free trading until a permanent deal can be agreed sometime in the future.
Judging by the past few weeks, the UK must now wish it had a Ceta style deal already in place with the United States.
Here in Ireland, the leaders of the largest Canadian companies in Ireland and Irish companies doing business with this G7 nation can only hope that Ireland is not among the last — or the very last — to ratify Ceta.
There has indeed been opposition to the agreement in Ireland which cannot be ignored.
The Green Party has been involved in a long-running, debate about Ceta.
In mid-September, the Oireachtas Committee tasked with looking at the trade deal was effectively deadlocked when two Green Party representatives found themselves on opposite sides of the argument.
The Committee on European Affairs saw Green Senator Vincent Martin voting against ratification, party colleague Francis Duffy, Dublin South West TD, voiced his support, leaving the 14-person committee split down the middle.
The result was a Committee report that could make no recommendation for or against but only restate the arguments.
One day after the Committee found itself deadlocked, on September 16, the High Court dismissed a legal challenge to ratifying Ceta, taken by Patrick Costello, the Green Party TD for Dublin South Central, on the grounds of the constitutionality of the so-called “investor courts”.
These “investor courts” could rule on complaints from either trade bloc which invests in either the EU or Canada. Irish critics say that this gives Canadian companies powers to challenge domestic Irish legislation.
However, this claim ignores two facts: First, that it provides those same protections for Irish companies doing business in Canada; and second, that any company can already use the domestic court system to make such a challenge — they do not need an Investment Court System (ICS) to do so.
The Dublin South Central TD had argued Ceta could have a “chilling effect” on Ireland’s willingness and ability to introduce new regulations.
The Labour Party also officially opposes CETA, listing concerns about labour rights and standards as well as with the ICS.
Sinn Féin have voiced similar concerns, saying they will “hold the Government to account” on the deal.
It can be argued that these concerns are a misunderstanding of what the ICS is designed to do: which is to help parties resolve a dispute efficiently using an independent tribunal, no matter what jurisdiction the dispute may arise in.
Above all, we should ask — what could Ceta mean for Ireland and the EU?
Let’s look at what it could do for our relatively small, export and FDI-driven economy as it fights to trade its way out of the twin crises of Brexit and the global pandemic.
The giant steps in trade, partnerships and the two-way flow of innovation and ideas between Canada and Ireland is one of the great, but often overlooked, success stories of recent times.
Since 2018, as the UK has moved towards a full break with the EU, the number of jobs provided by Canadian companies in Ireland has grown by 25 percent to over 15,000.
We have seen the number of new Canadian companies opening operations in Ireland more than double since Brexit became a reality.
There is also good news on the export front. Over the past few years Ireland has enjoyed a trade surplus of as much as €1bn with Canada. In 2020, some €2.1 billion of Irish goods were exported to the country. As a result, there are over 600 Irish companies now exporting to Canada which support 25,000 jobs here.
But Ceta — and the partnership and opportunities it offers — is not just about tariff-free exports and markets for the Irish whiskey, engineering, software or fintech sectors.
And it’s not just about the fast-growing number of Canadian multinationals employing thousands of Irish people here.
At the Irish Canadian Business Association, we constantly hear about the smaller successes and dynamic new cross-Atlantic partnerships being forged between our two countries with centuries-old connections.
One great example is Pharmapod, the Irish software company that has developed an innovative cloud-based platform to reduce medication error for patients.
Pharmapod CFO Anne Keogh and her team have been able to expand into the Canadian market and enjoy rapid growth in a market where, as Anne says, a shared business and social culture has allowed them to establish “wonderful working relationships”.
Coming in the other direction, giant Canadian companies like Shopify and Greenfield Global have found in Ireland, a natural gateway to — and home in — the European Union.
Shopify is one of the biggest e-commerce platforms operating globally, they have a significant presence in Ireland and John Riordan, director of customer support, and chair of the board at Shopify International believes Ceta brings huge benefits for Ireland, Canada, and the EU.
“From a business perspective, anything that works to eliminate tariffs and create less barriers is good for business,” says John.
Pointing to the fact that Ireland, the EU, and Canada have already, effectively been operating with almost all Ceta provisions in place for the past three years, John says companies like his own have seen what it can do for trade.
“There have been no issues, not alone that, it has advanced the causes of connected business between Ireland and Canada. The last step that is required is full ratification.”
Greenfield Global is a leading producer of high-value chemicals and bio ingredients, working with the next-gen biofuels and green energy R&D that are integral to a lower-carbon economy.
They are now a significant, high-value employer in Co Laois, with a 3,800 sq meter facility and ambitious growth plans.
Talk to Greenfield Ireland managing director Ken Finnegan and he will tell you just how important Ceta is for the continued growth of Irish-Canadian trade and partnerships.
The Big Headline from Ceta is that — once ratified by all EU states — it will remove 99 per cent of customs duties between two giant economic blocs.
But among other game-changing benefits — it will also open up the services market and end restrictions on open access to public procurement contracts.
This will allow Irish companies to bid on major projects in Canada — where the government has recently updated and expanded a massive, $180 billion, 12-year infrastructure plan that had already ear-marked just under $12 billion for green and social infrastructure as well as transforming the public transit system for a low-carbon, renewable energy future.
This is the progressive, environmentally-friendly future that Irish companies and Irish innovation and expertise will be able to play a full part in because of Ceta.
Canada has striven to become a global leader in the fight for a more sustainable world. This is the course world’s second-largest country — and 10th biggest economy — is firmly set upon.
In economic terms, for jobs, trade and development but also for our planet’s future, we believe that Ceta can be a giant step forward — and not — as some would portray it, a plan to hand corporations the legal powers to bypass the checks and balances of elected governments in investor courts.
But there is one more argument to be made for Ireland ratifying Ceta at the earliest opportunity.
And that is as a statement of profound, positive intent.
It would be as a part of one progressive, democratic, dynamic group of nations — seeking common cause and ever-closer partnership with a G7 country that shares their values and goals on the other side of the Atlantic.
With the global challenges now facing us, the trade agreement that began to take shape as far back as 2004 makes even more sense for Ireland today.
It’s time to signal that intent. It’s time for Ireland to ratify Ceta.
Irish government figures come days after M&S says it is scrapping 800 lines due to ‘excessive paperwork’
By Lisa O’Carroll of The Guardian
Exports from Great Britain to Ireland fell by almost £2.5bn in the first seven months of the year with Brexit emerging as a major factor, according to official Irish government data.
The figures from Ireland’s Central Statistics Office (CSO) come just days after Marks & Spencer said it was scrapping 800 product lines from its stores in the Republic of Ireland because of “excessive paperwork” and health controls on food.
The CSO recorded the value of goods imported from Great Britain for January to July 2021 as €6.3bn (£5.4bn), a 32% decrease year on year, equivalent to €2.9bn in sales compared with the same period in 2020.
Imports in July alone were down 32% compared with the same month in 2020, with the largest decrease seen in food and live animals.
These categories of goods have all been subject to new physical and documentary controls on entry to Ireland since Brexit came into force in January.
However, goods travelling in the other direction are not subjected to the same controls with the government last week announcing that checks due to be implemented in October and January would be delayed by up to nine months.
The asymmetrical trading relationship now appears to be translating into visible wins and losses. Sales rocketed for Irish traders by almost £500m year on year, up 60% (€567m) in July to €1.5bn, and up 26% in the first seven months of 2021.
The largest increases in sales to Great Britain were in the chemicals and related products sector, which is not yet subjected to the stringent regulatory controls on entering Great Britain.
M&S last week blamed “pointless” paperwork for exports into France and Ireland, announcing it was closing 11 of its French stores because of problems supplying them with fresh produce since Brexit. It has said it will now try to source more product locally in Ireland, a strategy successfully deployed for the last decade by Aldi and Lidl in Ireland.
The UK government said it was postponing checks on British borders because of the pandemic and global supply chain issues. But border posts were not ready and work has not yet started at either Dover in England or Holyhead in Wales, the two main gateways into the UK.
The UK recently chose a site for its border-control post at Parc Cybi in Holyhead in Anglesey, but on Monday it was clear work had not yet started.
Reproduced here by kind permission of the author and The Guardian newspaper.
