EU sees risks in depth of Ireland's economic ties to the US
Ireland's gross domestic product (GDP) is forecast to grow by 3.4pc in 2025 and 2.5pc in 2026 supported by a strong labour market, according to the European Commission Spring 2025 Economic Forecast published today.
The Commission's estimates are weaker than Department of Finance estimates and warned our deeper ties to the US now pose a notable downward risk for the country.
The EU forecast does not anticipate a recession as a result of the potential US / EU trade war and Donald Trump's imposition of tariffs.
However, the Commission says the high levels of uncertainty and a deterioration in global trading conditions will detract from growth. "Ireland's openness and high trade and investment links to the US leaves it vulnerable to further protectionist policies. While the current US tariff exemptions - notably on pharmaceuticals - cover a large majority of Ireland's goods exports to the US, the introduction of new tariffs, along with broader US policy changes to dis-incentivise investment and activity in Ireland present significant downside risks to Ireland's economy,' the report said.
That compares to Department of Finance estimates released earlier this week for (GDP) growth of 4.1pc this year and 3.4pc in 2026.
GDP is the global standard measure for economies and used to make easy comparisons between country.
In Ireland the alternative measure, modified domestic demand, is seen by many as a truer reflection of activity within the economy. The EU says that is set to expand by 2.2pc in 2025 and 2.3pc in 2026. That's roughly in line with the Department of Finance, which has said it expects growth 2.5pc this year and 2.75pc next year.
Ireland is expected to continue producing budget surpluses, even with significant risks to the windfall levels of corporate tax revenues in recent years, but those surpluses are tipped to shrink.
The forecasts were published on Monday by Economy Commissioner Valdis Dombrovskis.
The Commission does not think the recent rebound of food inflation in particular is a sign of wider price pressure in the Irish or wider EU economy,
with lower prices for non-energy industrial goods and decreases in commodity prices are expected to dampen the impact of price rises. Headline inflation is forecast to reach 1.6pc in 2025 and 1.4pc in 2026.
The Commission's Spring Forecast projects real GDP growth in 2025 at 1.1pc in the EU and 0.9pc in the euro area– broadly the same rates as last year.
The EU economy is expected to grow by 1.5pc in 2026, supported by continued consumption growth and a rebound of investment. Inflation in the euro area is now anticipated to reduce more swiftly than expected back in the autumn, to the ECB's 2pc target by mid-year and to average 1.7pc in 2026.
That pace of inflation, if it proved correct, would support the case for continued interest rate cuts.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Irish Times
an hour ago
- Irish Times
Musk talks up robotaxis as Tesla's fundamentals fade
Elon Musk has teased a June 22nd debut for Tesla's long-promised robotaxi service, starting with 10-20 modified Model Ys crawling around Austin, Texas, under remote supervision. The launch comes at a fraught time. Tesla's car sales are sliding, Musk has alienated a swathe of customers, and his political entanglements – most recently a bust-up with Donald Trump – have unnerved even the bulls. Yet somehow, investors are still on board. Tesla shares slumped when Musk and Trump went to war, but clawed back their losses within days. While the stock is down 14 per cent in 2025, it's still 35 per cent above where it was trading before November's US elections. READ MORE That's hard to fathom, given the steady drip of bad news since: shrinking sales, eroding margins, customer boycotts, and now a spat with Trump that could cost Tesla its political cover. It's driving sceptics quietly mad. 'I have seen companies where the stocks have become detached from reality', said GLJ Research's Gordon Johnson recently, 'but I've never seen a company where the stocks stay detached from reality'. JPMorgan's Ryan Brinkman insists 'fundamentals will eventually matter'. So does Barclays' Dan Levy, who says the stock 'hasn't fully confronted weak fundamentals', which 'don't seem to matter ... until they eventually matter'. With the Trump connection now toxic, the robotaxi is Tesla's new story. Its debut should be a credibility test after years of missed autonomy deadlines, but Tesla investors are a forgiving bunch. Reality may have the last word, just not yet.
RTÉ News
an hour ago
- RTÉ News
Government awards contract to French company to develop sonar system
A government contract worth tens of millions of euro has been awarded to a French defence technology company to develop a new sonar system for Ireland. The towed sonar capability, when attached to an Irish naval vessel, will assist the Defence Forces with monitoring subsea areas in Ireland's Exclusive Economic Zone. It will help efforts to protect undersea communication cables and energy infrastructure, and also could assist in detecting illegal fishing, drug trafficking, terrorism and espionage in the future. The system is part of a wider project to boost maritime surveillance due to growing threats. The exclusive contract is with Thales DMS France, a company which specialises in advanced technologies in defence and security. The new sonar system is set to be operational in 2027. The Tánaiste and Minister for Defence Simon Harris said the investment will provide the naval service with a "state-of-the-art system, which will enable it to build a picture of our subsea". "It will serve as an important first step in creating a "pattern of life" in the subsea domain, with future projects further enhancing this capability" he said. French company Thales DMS France is currently leading a major European defence initiative that aims to strengthen the continent's capabilities in anti-submarine and seabed warfare. The SEACURE project is utilising a combination of air, surface, and underwater drones to detect and track underwater threats in challenging environments. However, there are worries about who will operate the new capabilities due to recruitment and retention problems within the Defence Forces, including the Irish Navy. Just one, or two, of the six vessel fleet can be out at sea due to staffing shortages. "Given the enhanced development of the blue economy and the exclusive economic zone that Ireland has, there's huge opportunity for delivery in terms of enhanced maritime security awareness. So the people are absolutely crucial, we don't want a stranded assets" said Marie Gleeson, Retired Lieutenant Commander with the Irish Navy. She said it is a really 'positive step forward' in terms of enhancing the navy's ability to patrol Ireland's maritime domain. "When I was a ship's captain, you patrolled very regularly, you want to maintain a presence in this really important area and not having the ability to see what was happening underneath the surface of the ocean was a restraint in some respects. I think it is hugely important from a strategic defence capability that we have the capacity to deploy towed sonar" she added. Ireland has one of the largest maritime Exclusive Economic Zones (EEZ) in the European Union. There are extensive undersea cables, sea fishing and energy production capacity and infrastructure in the waters. One of the biggest concerns is the safeguarding of these undersea cables which keeps everything from banking systems to TikTok operating. Marine expert and consultant, John Paul Kearns said the introduction of the new sonar system is a long time coming. "Once we develop our offshore wind we will have lots of pipelines and cables coming ashore and that infrastructure needs to be protected, monitored and surveyed all the time. Using this sonar and companies like Thales, and hopefully bringing it back in-house into Ireland, we can actually manage and monitor all of that" he said. "The reason we need to monitor it is we need to ensure that for one it's not being damaged in a mischievous or malevolent way. We have to make sure it's not damaged through storm damage. We have to make sure we can survey it… Because if you think of it… ten times the size of Ireland, underwater, is most of where the threat lies for the future" he said. In October 2024, then Tánaiste Micheál Martin said that there was a "risk" of sea cables being sabotaged following increased activity by the Russian navy and associated Russian merchant ships off the south and west coast of Ireland over the past number of years. The location of these vessels have raised concerns that undersea cables are being mapped. RTÉ News also reported in April that Minister for the Environment Darragh O'Brien has been warned that damage to Ireland's subsea gas interconnectors would have a catastrophic impact on the country's energy supply. Briefing papers and studies on energy security to the minister said that Ireland is highly vulnerable to the impact of gas supply disruptions and notes that a Russian naval vessel loitered over the Gas Networks Ireland subsea interconnector last November. Russia has denied that the presence of its military ships off the south, southwest and west coast of Ireland represent a threat. It comes as a public consultation on Ireland's first ever maritime security strategy was launched last week. The new strategy plans to map out Ireland's approach to maritime security and intends to look at how to deal and address emerging threats, vulnerabilities and protecting subsea infrastructure. A new maritime security unit was set up last year at the Department of Defence to look at ways to address maritime threats and risks to Ireland. Dr Margaret Stanley, who previously led the Office of Emergency Planning in the Defence Department and worked on peacekeeping matters at the United Nations in New York, was appointed to head the unit. Ireland's first maritime security strategy is expected to be published before the end of the year.
Irish Daily Mirror
2 hours ago
- Irish Daily Mirror
Government must reduce energy prices and bring down household bills, TD warns
The Government must reduce energy prices and bring down the sky-high cost of household bills, a TD has warned. Sinn Fein's Pa Daly insisted Irish householders were still paying too much for gas and electricity and that he now feared that a proposed new levy would hike prices even further. He grilled Environment Minister Darragh O'Brien on the issue in the Dail this week and called on him to rule out any new levies. It comes as senior Cabinet ministers have already hinted that there will be no energy credits this winter to offset costly bills. Deputy Daly said: 'Irish households are crippled by the most expensive electricity prices in Europe. Average electricity costs here are almost €1,800 per year, €350 more than the European average. 'The Government parties all promised they would introduce measures to help with the cost-of-living crisis when they were campaigning last November. 'Despite this, energy prices are 61% higher than they were in 2022. The Government has ruled out energy credits this year, saying they cannot become the norm. People are struggling, yet as part of the energy security review, the Government has suggested another levy, which would push up bills even further.' However Mr O'Brien insisted his Government was looking at ways to reduce household energy bills. He said: 'The programme for Government acknowledges the growing energy price and cost pressures on households and businesses and commits to bringing forward measures to contain these costs. 'The Government recently approved an extension of the 9% VAT rate currently applied to gas and electricity by a further six months to October 2025. 'That will cost an estimated €85million and it will be looked at again in the context of the budget. 'My department has established a cross-government energy affordability task force to identify, assess and implement measures that will enhance energy affordability for households and businesses. 'The focus of the task force will be on medium and long-term structural reform measures to address high energy costs in line with the EU action plan for affordable energy.' But Deputy Daly stated that this wasn't going far enough. He added: 'There is an awful lot the minister can do to bring down household electricity prices. The additional costs on household bills make up around 50% of the final electricity price to consumers. 'The programme for Government omitted any mention of network charges. It gave a vague commitment to explore funding models for the PSO to reduce bills. Is the minister going to do that?'
