Forecasting really is a waste of time. Fears of a big hit to confidence and the economy after Donald Trump unveiled his tariff plan in April proved misplaced, even if the longer-term impact of what happens in Washington is going to be vital.
So what fundamentals did change this year? The most obvious has been the gradual but steady invasion of artificial intelligence (AI) into all our lives. I remember early this year being struck by someone who organised an international conference telling me how hours of work that would normally have gone into providing an information pack on the sector were slashed by the use of AI – and a bit of tidying-up.
This was the year AI moved from something “out there” to an urgent business consideration across many sectors. It was also the key factor inflating a stock-market bubble that just seems to keep going. But everyone is still trying to work their way through what it will all mean.
As scientist Dr Ciarán Seoighe – a former senior executive at Research Ireland and now head of Forensics Ireland – said when he appeared before the Joint Oireachtas Committee on AI: “There is no scientific consensus in the community on what exactly AI is: there are those who believe AI is the best thing ever, and there are those who believe it is the end of mankind.”
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Against this backdrop, both policymakers and businesses fall over themselves referencing AI, but inevitably their answer about what to actually do often falls into the Father Ted category of responding to a crisis: “Is there anything to be said for saying another Mass?”
Many potential business users, while starting to invest significantly, have still to see a return through higher profits.
A survey by Forrester Research in the US around the middle of this year showed just 15 per cent of companies felt it had boosted their profit margins. It is early days, of course – but still. AI’s power to summarise large documents in the way companies need is still far from perfect, and deploying chatbots to provide services to customers is having mixed results, too. The technology is there, but its profitable deployment can still be a stumbling block.
The recent economic outlook published by Ibec points to a study by the UK’s Office for Budget Responsibility that showed a potential impact of AI of anywhere between zero and 6.8 per cent on productivity across developed economies over the coming decade. The organisation’s chief economist, Gerard Brady, concludes that “we are so early in the development and deployment of the technology that nearly all economic analysis of the long-term impacts is still speculative scenario planning rather than predictive.”
Despite this uncertainty, massive investment in AI is driving the US economy and the shares of a small number of companies key to the sector are driving the US stock market ever upwards. Brady refers to the work of economist Carlota Perez, who has examined bubbles through history and pointed to a cycle where initial enthusiasm encourages investors, helping to fund speculative development. When the bubble bursts, some of the initial investors and companies lose out, but the new technology and the basis for development is there – and entry for new players and investors is cheaper.
For now, investors continue to place positive bets. But there is certainly a risk of market upheaval here, with forecasts that some firms will cut AI investment next year. And as the Economic and Social Research Institute (ESRI) pointed out this week, many of the big US companies leading the charge are big investors, employers and taxpayers here. If they hit trouble, there will be some cost for the Irish economy.
We are already seeing some impact on the jobs market, though how much of the rise in youth unemployment – and the small rise in the number of 2024 graduates still looking for work – is directly due to AI is debatable.
It does seem a factor in a reduction by professional service firms in their graduate hiring this year. AI can perform some of the more menial tasks that new entrants would typically be charged with, though whether this is a “wait-and-see” decision for one year as firms try to work out what to do, or something more fundamental, is unclear.
All businesses still need new blood. But, like the advent of the internet, a big impact from AI in the years ahead is guaranteed. Alan Smeaton, emeritus professor at DCU and a member of the Government’s AI Advisory Council, refers to Amara’s Law – from futurologist Roy Amara – which says that we tend to overestimate technology’s impact in the short term and underestimate it in the long term.
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In this context, a vital area for national policy is education. Not the argument about students using AI to do their essays – though this needs to be addressed – but the way the technology is introduced to students and the need to reshape education in many areas to emphasise not only AI knowledge, but also the need for skills that employers find valuable in this new world. Smeaton points to Estonia, where the government has partnered with the big companies to provide tools that can be used in the classroom, overlaid with Estonian content and adapted to provide responses that encourage questioning and learning, rather than just spewing out information.
New guidelines have been produced for schools here, but Ireland has a long way to go. And at third level what, as one educationalist asked me, will be the outlook for someone emerging with a basic second-class business degree, where in many cases the curriculum is much the same as it was 10 or 20 years ago? Until recently, accountancy or finance might have provided a way into the market for this kind of “average” graduate. The first rung on the job ladder may now be harder to climb on.
If Ireland is really serious about riding this new wave for the longer term, schools and universities are where it needs to start, in the same way that previous waves of investment in pharma and tech were based on a ready supply of graduates. The “cages need to be rattled” on curriculums, according to Smeaton, with an opportunity for educators to focus on creativity, applying knowledge and “AI-proof” skills. Learning by rote has little value any more in a world where AI can produce the same answer instantaneously.
