Two pieces of new research suggest that some stability has returned to the economy and Irish business after months dominated by fears over the impact of Donald Trump’s policies. It would be unwise, given the unpredictable nature of the US president, to suggest that the risks have passed – his agenda of economic nationalism is negative for a small open economy like Ireland. However, the EU/US trade agreement appears to have reduced some of the key concerns. For now, an uneasy calm prevails.
In its latest assessment of the Irish economy, Goodbody Stockbrokers has said that “ the fog appears to be lifting” as the trade agreement and Trump’s major tax bill have reduced some of the risks. In particular, a cap has been agreed on tariffs for the pharma sector and the new tax legislation did not have any measures directly harmful to countries like Ireland.
That said, the publication of a White House report on the pharma sector ordered by Trump is still awaited and his reaction to this will be telling. Tensions also remain on the regulation of US digital technology companies in the EU.
For now, however, businesses – after a period of waiting and seeing – are getting on with it. A survey by Ibec, the business lobby group, shows that 80 per cent of its member expect to increase pay levels in 2026, albeit at a more moderate level than this year. More than four out of ten plan to increase their workforce and the vast bulk of the remainder intend to maintain current job numbers.
RM Block
This shows a considerable resilience in the economy in the face of ongoing uncertainty. Goodbody expects that the domestic economy could grow by 3.6 per cent this year and by more than 3 per cent in 2026.
An upset from Washington remains a risk. So does a gradual falling away in foreign direct investment, or a drop in the corporate tax revenues paid by big US companies. For the Government, the diplomatic challenges remain, but so, too, does the job of accelerating the delivery of vital infrastructure to underpin future investment and social progress.
