What does a new Labour government mean for Irish businesses?

As a new Labour government takes shape in Britain, Irish businesses are bracing for the potential ripple effects across key sectors, writes Vivian Nathan

As Britain transitions to a new Labour government, Irish businesses will closely monitor the potential impacts, as we are its closest neighbour.

Sectors such as construction, hospitality and retail may feel the ripple effects of Labour’s policies, especially regarding employment rights and consumer spending power, which are closely linked to broader economic conditions.

Construction sector

The construction sector in Ireland is paying close attention to developments in Britain, given the number of Irish construction companies operating in both jurisdictions.

Baker Tilly is currently working with several UK companies interested in Irish infrastructure spend, particularly in the rail sector.

Additionally, we have seen increased inquiries from UK labour companies looking to serve the Irish market, demonstrating a growing interest in cross-border opportunities.

The UK has been hampered by delays in decision-making before the General Election and the collapse of several construction contractors.

The cancellation of large parts of the High Speed 2 railway project has further motivated UK contractors to seek opportunities in Ireland, especially with the Irish Government’s commitment to significant infrastructure spending.

Meanwhile, the Irish housing market remains strong, with demand continuing to outstrip supply.

Nevertheless, local issues around capacity and planning present ongoing challenges for the construction sector in Ireland. Irish-origin construction businesses are actively tendering for work across the island, further highlighting the cross-border interest.

Hospitality and retail sectors

Ireland’s hospitality and retail sectors have faced significant challenges since the COVID-19 pandemic. Despite seeing increased demand, the hospitality industry has recently been rocked by rising costs, such as those experienced by Dylan McGrath and the Press Up Group.

These sectors are particularly sensitive to broader economic factors like inflation and interest rates, both of which are influenced by the economic situation in Britain.

Labour’s focus on enhancing employment rights in Britain, including potential increases in the National Minimum Wage and National Living Wage, could indirectly affect Irish businesses, especially those operating in both jurisdictions.

The proposed Employment Rights Bill, which aims to ‘make work pay’, may introduce measures such as banning zero-hour contracts and extending parental and sick leave.

These changes could increase operational costs for businesses, potentially leading to higher consumer prices, particularly in the North of Ireland, where the border economy is acutely sensitive to changes in British policy.

Adapting for the future

The change in government in Britain brings with it a level of economic uncertainty that is of particular concern to Ireland, given our close ties, shared border, and the fact that some Irish and UK businesses operate in both jurisdictions.

While it remains to be seen if the UK Labour government will adopt a ‘tax and spend’ approach, particularly in changes to the non-domiciled regime that could make Ireland a more attractive base, the full implications of Labour’s policies remain unclear.

What is clear is that key sectors in Ireland – particularly construction, hospitality, and retail – will need to stay informed and be prepared.

The changes in Britain could have significant consequences for Ireland, making it essential for Irish businesses to monitor developments and adapt accordingly.