Charting the Global Economy: ECB Nearing End of Rate-Cut Cycle
The European Central Bank is nearing the end of its campaign to lower interest rates after its eighth reduction in a year, according to ECB President Christine Lagarde.
With the euro-zone economy suffering repeated blows from US tariffs, the deposit rate was lowered by a quarter-point to 2%. India's central bank cut interest rates as well and reduced the cash reserve ratio for banks, providing a major liquidity boost to the economy.
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No more leprechaun economics: Ireland's tax swindle is finally ending
Donald Trump has sent Ireland to the naughty step. Once the altar boy of American commerce, Dublin now finds itself blacklisted alongside China, Germany and Vietnam, each a prime candidate for tariffs and sanctions. The offence? Running a surplus with the United States. On the face of it, the complaint seems petty. One country sells more than it buys. So what? But Ireland's problem, like the others on Trump's list, is that its surplus rests on a creed that has fallen out of favour. As offshoring hollowed out Middle America, the old Clinton mantra 'It's the economy, stupid' has begun to sound rather less clever than it once did. That, at least, is the mood in Trump's Washington. And judging by his campaign-trail fixation with the word tariff, many Americans agree: a reckoning is overdue. Ireland offers a particularly inviting target. Its surplus owes less to tangible exports than to tax gymnastics. A pill is made in Ireland for 50 cents, sold to a sister company (also in Ireland) for €10, and then shipped to the global market at the same price. The profit is booked in Dublin, while tax collectors elsewhere are left out of pocket. The trick doesn't stop there. Intellectual property is shifted to Irish subsidiaries, global sales are routed through Irish entities, and profits vanish into low or no-tax jurisdictions. Together, these sleights of hand form what we're invited to call the Irish economic miracle – a miracle that, by one estimate, deprives other countries of nearly $20 billion a year in tax revenue. The question being asked in Washington is: who benefits? Ireland, clearly. One in every eight euros of its tax revenue now comes from US firms. That's a fivefold increase since 2010, driven by Ireland's famously 'competitive' tax regime. It accounts for a large slice of a €150 billion bilateral surplus. When Irish Taoiseach Micheál Martin visited the Oval Office in March, Trump put it plainly: 'We do have a massive deficit with Ireland, because Ireland was very smart. They took our pharmaceutical companies away.' It's hard to argue with the logic. Ireland has been undeniably clever at attracting American capital. Spending it is another matter. Much of the money sits on Irish books without generating the economic activity one might expect. The state's coffers may be overflowing, but the windfall is narrowly concentrated. Public spending, as ever, has been handled with something shy of brilliance. From roads and hospitals to housing and energy, the services most visible to the public have seen little improvement, despite years of surging resources have been channelled into more headline-friendly ventures: a €350,000 bike shed outside parliament; a vast new hospital project already among Europe's most expensive; and billions annually to accommodate asylum applicants – most of whom, the government has conceded, are economic migrants. The miracle, it seems, left little room for prudence. As every lottery winner learns, easy money tends to breed excess. But with full coffers, Ireland could afford to paper over the cracks. Meanwhile, American tech and pharma giants have flourished. Apple, Microsoft, Pfizer and others have routed billions through Ireland, to the delight of shareholders and pension funds. If Trump moves to close loopholes or impose tariffs, these are the interests he'll have to console ahead of the midterms. The losers, predictably, are the American workers left behind by the long, slow flight of industry and tax revenue. Worse off still are the countries quietly drained by Ireland's magic act. The sums involved are vast. The structures that move them are so complex they can feel impossibly abstract. But the consequences are not. According to modelling by the Universities of St Andrews and Leicester, this tax loss has deprived more than 100,000 children of school attendance and some 1.1 million people of access to basic sanitation. Quibble with the methods if you like, but the core truth is hard to deny: when profits are rerouted, people are short-changed. Not that Dublin seems overly troubled. Only last month, Ireland's Taoiseach declared: 'Ireland earns its living from an open and fair approach to world trade.' The most pious nations often turn out to be the most artful. Ireland rarely misses a chance to sermonise on Gaza, climate justice, or whichever cause currently allows it to cast itself as Europe's moral compass. But as La Rochefoucauld noted, hypocrisy is the tribute vice pays to virtue. And by that measure, Ireland has paid handsomely. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
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