Latest news with #GNI
Irish Times
2 days ago
- Business
- Irish Times
Infrastructure shortfall means Budget 2026 needs to take money out of the economy
For economic nerds like myself, the Central Statistics Office 's July press conference launching the annual national accounts is a major highlight. It is not just because new data on economic growth are published but also because the CSO provides essential explanations of what the data really mean. That's important, given the complexity of the Irish economy . Undoubtedly the most exciting of these press conferences was in July 2016 when the national accounts publication showed a wholly unexpected growth of 25 per cent in GDP the previous year. Those results made headlines around the world, including the infamous 'Leprechaun Economics' moniker, but they didn't square with real living standards. The exceptional 2015 GDP figure showed that other measures of economic welfare were needed to reflect what was actually going on in Ireland. This led to the development of our own distinctive metric for economic activity, GNI* . However, because it is only calculated for Ireland, it is not widely understood elsewhere. So either the misleading GDP measure is used, or Ireland gets omitted from international comparisons. READ MORE This summer's data for growth in 2024 did not throw up surprises, but guidance was still needed from CSO statisticians to understand the detailed data. The economy clearly grew very vigorously last year, much more rapidly than most of our neighbours. [ The Irish economy grew by 22% over the past year. Yes, you read that right Opens in new window ] While growth in domestic demand was an essential part of the success, there was even more rapid progress in the export sector. The figures for 2024 don't take account of the €14 billion exceptional revenue from the Apple case, because the sum involved is considered a fine, with no corresponding output. Nonetheless, the Apple payment further strengthened the government's finances. Despite the threatening behaviour of the Trump administration , it seems likely that we will again see quite rapid growth this year. It will be next year before any US policy changes really begin to bite. While growth is strong, the latest numbers also show significant imbalances within the economy that make life difficult for many people, and are a challenge for policymakers. The current account of the balance of payments recorded a surplus of 4.5% of national income last year, showing a very large excess of national savings over investment. This sounds great, but in fact it masks a big problem. Investment, at 19 per cent of national income, is much too low. Either we must urgently deliver a big increase in spending to develop infrastructure such as housing , water, energy and transport, or else we need to slow the economy so that it can fit into its old clothes. [ Ireland's infrastructure is 32% behind international peers, IMF finds Opens in new window ] The surplus on the balance of payments shows that we have the savings to fund such a big increase in investment. The shortfall in housing at a time of rapid growth in the economy and our population has pushed rent and house prices up. The failure so far to ramp up investment and tackle the bottlenecks means that, strange as it may seem, the Government must now act to slow the economy to correct the imbalance. Failure to do so will see further house price inflation, and move the cost of living in Ireland even further out of line with our neighbours. Last year, with an election looming, the budget pumped too much money into the economy. That aggravated the problem of too little infrastructure, and helped further push up housing costs. With the election out of the way, this autumn in the budget the Government should take the hard decisions that are needed for the next four years. Given that they have not yet radically reformed the planning and regulatory framework to permit more investment, Budget 2026 needs to take money out of the economy to reduce demand pressures. The way to slow the economy is to raise taxes or to cut expenditure. Given the need for more investment, it looks as if higher taxes would be the right solution, while keeping a really tight lid on current spending. However, even a tough budget may not be enough. The strong growth in output and employment is coming from the success of the multinational sector. As this sector will be much less affected by a tough budget than domestic firms, it could continue to grow rapidly, adding to inflationary pressures. Of course, if Washington were to take action that seriously affects US firms in Ireland, the problem would not be too much growth but a major loss of output. However, if Trump's threats don't materialise, the Government may need to discuss with the IDA Ireland how the growth in employment in the multinational sector can be slowed.
Euractiv
4 days ago
- Business
- Euractiv
EU to tax tobacco, large companies to fund next budget
Whilst EU countries want an ambitious budget, they will also have to repay the bloc's €650 billion covid loans from 2028. The budget proposals must be approved unanimously. Euractiv is part of the Trust Project Eddy Wax and Jacob Wulff Wold Euractiv Jul 12, 2025 15:19 2 min. read News Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources. The European Commission is hoping all EU countries can agree on new taxes on tobacco, large companies, electronics waste and carbon emissions to fund the EU budget, according to a draft proposal seen by Euractiv. The bloc's members are straining their finances, but the Commission wants an ambitious 2028 to 2034 budget (MFF) to boost competitiveness and defence. Direct contributions based on GNI, which financed 56% of the previous budget, "will reach its limits as financing needs increase," writes the Commission in its draft, before presenting its proposal for five new EU-level income sources. A Tobacco Excise Duty Own Resource (TEDOR) would "generate significant revenue" and also help towards the EU's health policy objectives. The document does not detail the excise duties, but Euractiv previously reported that the Commission has considered a 139% tax hike on cigarettes. A Corporate Resource for Europe (CORE) would tax companies with a permanent establishment in the EU and over €50 million in annual net turnover. To aid its green ambitions, the Commission proposes new contributions based on electronics waste. Two carbon levies which have already been floated – ETS1 and CBAM – will tax emissions inside and outside the EU. These proposals will stir debate among EU countries, which must approve them unanimously. To sweeten the deal, most ETS revenues would go to national budgets, and a temporary "solidarity adjustment mechanism" would balance differences between winners and losers of the new system. Proposals from 2020 and 2023 have not progressed much in the council, but the next budget is a unique opportunity. It is very difficult to agree on new revenue sources without also discussing expenditure, one EU diplomat told Euractiv this week. Whilst EU countries want an ambitious budget, they will also have to repay the bloc's €650 billion covid loans – known as the Recovery and Resilience Facility – from 2028. The EU will dedicate roughly one-fifth of its current annual budget size to these repayments (equal to €25-30 billion each year). (ow) Euractiv is part of the Trust Project
Reuters
08-07-2025
- Business
- Reuters
Pharma-driven Irish GDP growth revised down to 7.4% q/q in Q1
DUBLIN, July 8 (Reuters) - Rapid growth in Ireland's gross domestic product (GDP) during the first three months of the year was revised down on Tuesday to 7.4% quarter-on-quarter from 9.7% previously. The growth was driven by a surge in pharmaceutical exports to the U.S. ahead of threatened tariffs, officials have said. With Ireland's large multinational sector often distorting GDP, officials prefer to use modified domestic demand (MDD) to gauge the strength of the domestic economy. Quarter-on-quarter MDD growth was revised sharply up to 2.0% from a provisional 0.8%, Central Statistics Office (CSO) data showed. Revisions to previous quarters meant MDD grew by a slower 1.8% in 2024 compared to the 2.7% initially reported. GDP, which is still used to calculate Ireland's share of activity across the euro zone, grew by 2.6% in 2024 versus an initial estimate of +1.2%. Modified gross national income (GNI*), an annual measure that also strips out the distorting impacts of multinationals to give a more accurate picture of the total size of the Irish economy, suggested it grew by 4.8% in 2024 compared to 2023.
Irish Times
08-07-2025
- Business
- Irish Times
Irish economy grows at robust rate of 5% despite turmoil
Ireland's economy grew at a robust rate of nearly 5 per cent last year as consumers spent more on goods and services and exports from the multinational-dominated IT sector accelerated. The Central Statistics Office 's (CSO) latest national accounts show the economy, in gross national income (GNI*) terms, expanded by 4.8 per cent in 2024. This was marginally down on the 5 per cent recorded the previous year but well above the European average. GNI* is the CSO's bespoke measure of national income, designed to weed out the distortionary effects of multinationals. READ MORE The agency said personal spending on goods and services, a key measure of domestic activity, increased by 2.9 per cent last year as wages rose faster than inflation, giving consumers a real income boost. 'Domestic-dominated sectors' expanded by 3.6 per cent in 2024 while multinational-dominated sectors increased by 1.5 per cent. [ Three positive metrics point to health of economy Opens in new window ] 'There were higher levels of economic activity for most sectors focused on the domestic market in 2024,' the CSO said, noting the financial and insurance sector expanded by 16.1 per cent while the real estate activities sector expanded by 6 per cent. The globalised industry sector, which includes the State's big pharmaceutical sector, contracted by 0.5 per cent in 2024 when compared with 2023, the second consecutive year of contraction. How the wealthy are buying up land to avoid inheritance tax Listen | 22:03 However, the information and communication sector continued to grow, increasing by 6.2 per cent in the year. Gross domestic product (GDP), the traditional measure of economic growth, expanded by 2.6 per cent in 2024, the agency said. It also revised downwards its earlier 9.7 per cent estimate of GDP growth for the first three months of 2025 to 7.4 per cent. [ Irish businesses observe 'silent slowdown' in the economy as confidence falls Opens in new window ] The globalised industry sector expanded by 16.5 per cent in first quarter as pharma firms here rushed to stockpile product in the US before the imposition of tariffs in April. Pharmaceuticals, Ireland's biggest goods export, currently remains outside the scope of US tariffs , providing the State's export trade some cover. However, the US has reportedly threatened to hit European Union (EU) agricultural exports with 17 per cent tariffs, a move that could hurt food and drink exporters here. The EU has been given an additional three weeks, to August 1st, to negotiate an agreement with the US to avert an escalation of tariffs.
Yahoo
08-07-2025
- Business
- Yahoo
Pharma-driven Irish GDP growth revised down to 7.4% q/q in Q1
DUBLIN (Reuters) -Rapid growth in Ireland's gross domestic product (GDP) during the first three months of the year was revised down on Tuesday to 7.4% quarter-on-quarter from 9.7% previously. The growth was driven by a surge in pharmaceutical exports to the U.S. ahead of threatened tariffs, officials have said. With Ireland's large multinational sector often distorting GDP, officials prefer to use modified domestic demand (MDD) to gauge the strength of the domestic economy. Quarter-on-quarter MDD growth was revised sharply up to 2.0% from a provisional 0.8%, Central Statistics Office (CSO) data showed. Revisions to previous quarters meant MDD grew by a slower 1.8% in 2024 compared to the 2.7% initially reported. GDP, which is still used to calculate Ireland's share of activity across the euro zone, grew by 2.6% in 2024 versus an initial estimate of +1.2%. Modified gross national income (GNI*), an annual measure that also strips out the distorting impacts of multinationals to give a more accurate picture of the total size of the Irish economy, suggested it grew by 4.8% in 2024 compared to 2023.
