It was another excellent year for the IDA in 2019 with a net 13,867 new jobs created by multinationals supported by the agency. There are now 245,000 people – about 10.5 per cent of the overall workforce – employed by multinationals here, generating €13.3 billion in direct wages. The agency’s ability to keep attracting strong levels of foreign direct investment helped to keep the home fires burning during the recession that followed the 2008 crash.
However, our success over many years in attracting investment should not be taken for granted, a point acknowledged by IDA chief executive Martin Shanahan at the launch of its review for last year on Wednesday. Eastern European states have sharpened their pitch to multinational companies seeking a base in the EU, with some using the IDA's model as a template for success.
Lithuania, for example, has carved out a niche in the financial technology sector. Labour and other costs are lower there than in the Republic, it has implemented a series of reforms in recent years to make it easier to do business and it has a competitive headline corporation tax rate of 15 per cent.
This income could be easily undermined by imminent OECD tax reforms
There are other clouds on the horizon for the IDA as it prepares to publish a new five-year strategy. The threat of further damaging trade wars looms large, particulary if Donald Trump wins another four years in the White House later this year. Trade wars inevitably mean less cross-border investment by companies and weaker economic growth. This would be bad news for a small open economy such as ours.
It is estimated that about 80 per cent of the record €10.9 billion generated in corporation tax receipts last year was derived from a small cohort of mainly US multinationals in the pharma, tech and financial sectors. This income could be easily undermined by imminent OECD tax reforms, and a major slowdown in global economies. The threats are real and the challenge for the next government is to ensure the Exchequer finances – and public services – can withstand any significant downturn.