As the “year of elections” continues to unfold, Ireland faces a changing global tax environment, but with change comes the opportunity to position the country as a beacon of stability for continued FDI. Cillein Barry and Susan Buggle dig into the details As a small, open economy, Ireland is a competitive location for foreign direct investment (FDI). However, we are also subject to the impact of changes to tax regimes globally, most notably those driven by the Organisation for Economic Cooperation and Development (OECD), the European Union (EU) and the US. Changes to the tax regime in the US, in particular, have an indirect material impact on Ireland’s attractiveness as a location for FDI.  This year has been cited as “the year of elections”, with roughly half the world’s population going to the polls in 2024. The outcome of elections across the EU and, later this year, in the US may serve to shape future tax policy impacting Ireland.  Here at home, though the Irish Government has denied claims of an early election in 2024, an anticipated “giveaway” budget on 1 October means an early Irish election remains a distinct possibility. The US presidential election and tax policy While the outcome of the US presidential election cannot be predicted with any certainty at this time, we do have some insight into the tax policy objectives of both the Democrats and the Republicans should they come to power this year.  In considering possible changes to US tax policy, it is important to note that the approval of tax legislation generally requires 60 votes out of 100 in the US Senate.  This means that one party must hold a large majority or, alternatively, there must be bi-partisan co-operation to approve any proposed changes to tax policy. Neither of these scenarios seems likely in the aftermath of the upcoming presidential election.  While tax legislation may also be passed by a simple majority using a process known as “budget reconciliation”, the relevant tax measures cannot increase the long-term deficit of the US.  In an era of limited bi-partisan co-operation, significant US tax reform is therefore unlikely, as it would require either a super-majority in the Senate or the introduction of tax measures regarded as fiscally neutral over the long-term.  Understanding the Tax Cuts and Jobs Act In 2017, then US President Donald Trump’s Republican administration introduced some of the most significant reforms to the US tax code in three decades under the Tax Cuts and Jobs Act (TCJA).  The key measures for US businesses were broadly designed to lower the US corporate tax rate to one more comparable with competitors among OECD member countries and to protect the US tax base. These included: Corporate income tax rate: a reduction of the US corporate income tax rate from 28 to 21 percent. Global Intangible Low-Taxed Income (GILTI): a 10.5 percent tax on a portion of the income earned by foreign subsidiaries of US companies. Foreign-Derived Intangible Income (FDII): a preferential rate of 13.25 percent for income earned by US companies outside the US on certain intellectual property. Base Erosion and Anti-Abuse Tax (BEAT): a minimum 10 percent tax on base erosion payments made by US entities to related parties outside the US. The TCJA was introduced using the budget reconciliation process at a time when there was a Republican congressional majority combined with a Republican president – not a single Democrat voted in its favour.  Having already introduced such significant reform, what more could the Republican side seek to introduce in 2025? In answering this question, it is important to note that a large part of the TCJA measures were temporary, with 25 of the tax cuts introduced under the Act due to expire in 2025. This includes a slated increase in the rate of GILTI (10.5% to 13.125%), BEAT (10% to 12.5%) and FDII (13.125% to 16.406%). The Republicans are likely to face pressure from US businesses to reverse these planned increases and preserve the impact of the TCJA.  However, the Republicans are also likely to face pressure to extend several individual tax cuts included in the TCJA, which together impact more than half of US households. Indeed, both Democrats and Republicans are in favour of retaining at least some of these measures. The Democrats’ tax proposals The Democrats’ preferred tax policy was outlined in March 2024 in Joe Biden’s “Green Book” budget proposals. These proposals seek to reverse many of the TCJA tax cuts and include: Increasing the corporate tax rate from 21 to 28 percent; Increasing to the GILTI rate from 10.5 to 21 percent; and A repeal of the preferential rate for FDII. To introduce such tax proposals under a new leader, the Democrats would likely require a significant majority, as it would be challenging to introduce such measures while balancing the books to achieve a fiscally neutral outcome.  US Presidential elections: the likely outcome Many US commentators predict a split government in the aftermath of the US presidential elections, with neither party controlling the House and Senate.  Marrying this with the complex procedures required to pass tax legislation and the political pressure to preserve tax cuts for individuals, the most likely outcome for US business taxation is little change to the status quo regardless of who will be elected as the new US President.  Though Republican rhetoric has centred on cutting the federal corporate income tax rate to 15 percent, this should be viewed in a similar light, although the threat of 10 percent tariffs and the EU’s response will need to be monitored closely.  The other key area to watch is US engagement with the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 tax proposals. Under Pillar Two of BEPS 2.0, this year has seen the most significant change in international tax in recent memory, with many countries, including Ireland, introducing a minimum 15 percent tax on the corporate profits of large multinational groups.  Despite positive indications from the US Treasury, achieving sufficient political support to introduce the Pillar Two proposals in the US has proved elusive. However, the mechanics of these rules will mean that US-headquartered groups are likely to be affected by the global minimum tax rules from 2026 onwards.  If Pillar Two plans proceed as anticipated, it remains to be seen how the US will react and whether the party in power will seek to introduce retaliatory measures.  Republicans sitting on the powerful Ways and Means Committee have already outlined proposals to impose an additional five percent tax rate each year on the US income of entities located in foreign jurisdictions applying the Pillar Two rules.  The outlook in Europe We have witnessed significant political developments across Europe in recent weeks, including the election of a new European Parliament in June and domestic parliamentary elections taking place in several neighbouring European countries, most notably France and the UK.  In July, Hungary took over its Presidency of the Council of the European Union and Ursula von der Leyen was re-elected as the President of the European Commission. EU commissioners and working groups will be appointed in the coming weeks. These developments will play a key role in shaping the future direction of taxation policy in the EU.  Recent years have seen the introduction of a swathe of EU-wide tax initiatives, including measures aimed at tackling tax avoidance (e.g. the Anti-Tax Avoidance Directive), measures to increase transparency (e.g. the EU public Country-by-Country Reporting Directive) and measures to introduce OECD BEPS 2.0 Pillar Two provisions across the EU via the Minimum Tax Directive.  While Pillar Two has progressed, work on the OECD’s other key initiative to reallocate a portion of the profits of the largest multinational groups to jurisdictions in which customers are located (known as Pillar One) is at best delayed, but more likely dead.   With progress on Pillar One potentially stalling, a renewed focus may be placed on introducing alternative Digital Service Taxes (DSTs), either unilaterally or on an EU-wide basis. In this regard, the current moratorium on introducing DSTs at an EU level is due to expire on 31 December 2024. EU-wide tax measures EU institutions are continuing to work on a range of other tax measures, including Business in Europe: Framework for Income Taxation (BEFIT), a proposal for a consolidated EU tax base that would be allocated to Member States, and the proposed “Unshell Directive” aimed at tackling the potential misuse of entities without sufficient substance for tax purposes. It remains to be seen which tax initiatives will get priority treatment under the incoming Hungarian Presidency of the Council of the EU, with its stated slogan – “Make Europe Great Again” – focusing on European competitiveness as a key priority.  This is likely to signal shifting sands ahead for EU taxation policies, particularly in the context of Hungarian Prime Minister Victor Orban publicly calling BEPS 2.0 Pillar Two “a catastrophic failure,” serving to dampen competitiveness.  EU Member States have also advised the European Commission to slow the pace of development of direct tax proposals, given the significant volume of measures introduced in recent years. Therefore, a more benign approach to tax policy is expected at an EU level for the foreseeable future. Shifting taxation policy: the Irish impact  In an environment of increasing uncertainty, it is worth bearing in mind Ireland’s unique position as an economic gateway for both Europe and the US.  While US investment in Ireland is well-publicised with more than 950 US companies located here, Ireland now also ranks as the ninth largest foreign direct investor in the US, employing about 100,000 people in the States.  Ireland is also the only English-speaking common law trade and investment gateway to the EU. Ireland’s competitive corporate tax rate and transparent and stable tax policies have been a crucial factor in attracting FDI. This tax policy has consistent cross-party support.  Other key factors include our highly educated and skilled pool of graduates, particularly in science, technology, engineering and mathematics (STEM), our clear and consistent regulatory environment in key areas such as data protection, and Ireland’s attractiveness as a place to live and work. Ireland must, however, guard against complacency. In a constantly evolving environment, it is essential that we focus on ensuring that Ireland remains a competitive and attractive location for FDI. This includes reducing the cost of doing business and facilitating access to talent.  On a global basis, tax competition remains alive and well and a new wave of incentives and subsidies is being introduced by competing jurisdictions.  Our regimes for attracting high-value jobs and businesses – particularly our research and development (R&D) tax credit, reliefs for intellectual property and international assignees – continue to be key pillars in this space.  With ongoing uncertainty within the EU and across the Atlantic, we now have an opportunity to position Ireland as a beacon of stability and a safe harbour jurisdiction for foreign direct investment. This opportunity must be grasped.    Cillein Barry is Tax Partner with KPMG  Susan Buggle is Tax Principal with KPMG

Joe Biden’s withdrawal from the US presidential race marked the departure of the last “Atlanticist” in American politics and Europe is ill-prepared for what lies ahead, writes Judy Dempsey  The decision by Joe Biden not to run against Donald Trump has upturned American politics. There are so many uncertainties about who will be elected as the next president of the United States on 5 November.  Until then, America will be preoccupied with domestic politics. It’s going to demand huge effort by the departments of state and defence to keep the focus on Ukraine, Israel and what is happening in the Middle East, not to mention China.   With the exception of Ukraine, Europe is a bystander, but Biden’s decision could change the transatlantic relationship.  Few European leaders, apart from French President Emmanuel Macron, understand how this fundamental shift in transatlantic dynamics could affect Europe’s defence, security and intelligence gathering.  Biden is the last “Atlanticist.” His career, experience in foreign policy and age made him a believer in the enduring bonds between the United States and Europe. Yes, his administration complained about Europeans not taking their defence or security seriously, but intellectually and emotionally, he is an Atlanticist.  Donald Trump cares little about Europe, the EU, NATO, or the idea of “the West”. Even if Europe increased its share of defence spending to NATO, it would never be enough. For Trump, Europeans are free-riders and unable collectively to think and act defensively. For him, this is Europe’s problem, not America’s. Just as Ukraine is not America’s problem either. If a Democrat wins the US presidential election, they will likely belong to the younger generation whose past has no connection with Europe and which is more attuned to the emerging competition between the United States and China, Russia and other countries resentful of America and what it represents.  This shift also has major implications for Europe’s security, its economy and future developments in Ukraine. Yet, Europe is not prepared for the changes taking place across the Atlantic.  The post-1945 era that was built on multilateral institutions, arms control and a confident West is ending, so what can Europe do to deal with such irreversible change?  EU Commission President Ursula von der Leyen wants Europe to have a Defense Tsar and a collective defense-spending policy. Neither is likely to fly – and not just because neutral countries would not buy into them.  Germany has rejected proposals to finance new defence purchases through joint borrowing, arguing that there is already enough industrial and research funding for defence.  On top of this, because defence is such a national issue, it is hard to see member states ceding any of this sovereignty to Brussels. The real issue here is Europe. The 27 member states can’t agree on which direction the union should take. More political and economic integration would make sense, but several countries want to regain more sovereignty at the expense of making Europe capable of speaking with one voice.   As the United States and the West decline, there is a chance for Europe to step in. Unfortunately, member states and EU leaders lack the courage to do what is needed.  Judy Dempsey is a Non-Resident Senior Fellow at Carnegie Europe and Editor-in-Chief of Strategic Europe *Disclaimer: The views expressed in this column published in the August/September 2024 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor.

Chartered Star 2024 winner Evan O’Donnell talks to Susan Rossney, Sustainability Advocacy Manager with Chartered Accountants Ireland, about the future of sustainability in the profession Evan O’Donnell was recently named Chartered Star 2024, an annual designation recognising outstanding work in support of the UN Sustainable Development Goals (SDGs).   Run in partnership with One Young World and Chartered Accountants Worldwide, the aim of the annual Chartered Star competition is to celebrate the difference-makers in the profession who are helping to combat the climate crisis by bringing real, positive change to their workplaces and communities. As Chartered Star 2024, O’Donnell will attend the One Young World Summit, representing Chartered Accountants Ireland and Chartered Accountants Worldwide, in Montreal, Canada, in September. Here, he talks to Susan Rossney about his interest in sustainability and social responsibility. Tell us about your decision to become a Chartered Accountant. What attracted you to the profession? I loved accounting in secondary school – that “yes” moment when you know your inputs are the same as your outputs! My mother was a mathematics teacher, and my father was a banker, so figures are certainly in my DNA.  I studied accounting at University College Cork, but it wasn’t until I attended a careers fair that I understood the versatility of a career in accounting and the many doors Chartered Accountancy can open.  Have you always been interested in sustainability?  I’ve been interested in social responsibility from the time I was 16 when I travelled to India and worked with street and slum children in Calcutta.  Since then, I’ve volunteered for a range of charities, including Trócaire, Mary’s Meals, HOPE, Cork Penny Dinners, Pieta, Irish Guide Dogs for the Blind, the Irish Cancer Society and Breakthrough Cancer Research.  My interest in sustainability started when I led a sustainable gardening project at college. Volunteers completed training certificates and visited local nursing homes to assist the elderly residents in planting flowers and growing vegetables. It showed me what was possible. Since then, I’ve looked for opportunities to do more and was delighted when I got the chance to host a sustainability networking event at the Apple headquarters in Cork when I was Co-Chairperson of Chartered Accountants Student Society Cork. What initially sparked your interest in becoming a Chartered Star? I heard about the Chartered Star competition during the first year of my training contract with PwC.  In 2020, I was fortunate to be part of a fantastic network, the Irish FinBiz Task Force, with 30 finance and business professionals across Ireland. It had been founded by two previous Chartered Stars and, as the years went on, more Chartered Stars emerged from the network. I was on the network’s SDG Awareness Team where Patrycja Jurkowska (2019 winner) provided us with great insight and knowledge on the topic.  I saw how the competition opened many doors for my colleagues, and I felt it was an opportunity to meet amazing ambassadors of sustainability, be part of a knowledge platform and share key learnings with my network.  I am very proud to be part of the Chartered Accountants Ireland Chartered Star family! What do you see as the greatest sustainability-related impacts, risks and opportunities for Ireland?  Ireland faces significant sustainability challenges, but also has many opportunities. Climate change is causing more extreme weather, threatening infrastructure and agriculture. Biodiversity loss, due to urbanisation and intensive farming, is reducing ecosystem services like pollination and water purification. Resource depletion, including water scarcity and soil degradation, is harming agriculture and water supplies. Economic risks include the vulnerability of agriculture to climate variability and potential negative impacts on tourism from environmental degradation.  Dependence on fossil fuels poses a risk as global policies shift towards renewables.  Social risks involve health issues from heatwaves and pollution, as well as displacement due to coastal erosion.  Regulatory risks stem from the high costs of complying with EU environmental regulations. However, through all this, there are significant opportunities.  Renewable energy development, particularly wind and marine energy, can reduce fossil fuel dependence and create jobs.  Sustainable agriculture, including organic farming and agroforestry, can boost biodiversity and resilience.  Green technology and innovation, such as circular economy practices and smart grids, can enhance sustainability and efficiency.  By implementing robust policies through the Climate Action Plan and participating in the EU Green Deal, Ireland can lead in global sustainability efforts, attract investment and build a resilient future. Where do you see opportunities for young professional Chartered Accountants in sustainability? Chartered Accountants have many opportunities to help meet sustainability challenges. We can leverage our skills in financial analysis and reporting to enhance transparency in sustainability metrics, ensuring that companies’ environmental and social impacts are accurately reported and assessed.  We can specialise in sustainability assurance, auditing environmental, social and governance (ESG) reports to provide stakeholders with credible information. We can advise businesses on integrating sustainable practices into their operations and strategies and identify cost-saving measures through energy efficiency, waste reduction and sustainable supply chain management.  We can also influence policy by working with regulatory bodies to shape sustainability standards and frameworks.  Additionally, we can drive innovation by supporting the development of green finance products, such as green bonds and sustainable investment funds.  By combining our financial expertise with a commitment to sustainability, young professional Chartered Accountants can play a crucial role in fostering sustainable economic growth and addressing global environmental challenges. Can you tell us about your sustainability role with PwC? I always had a passion for sustainability, and I wanted to incorporate this into my day-to-day life at PwC.  During my time with PwC Cork, I worked in the Assurance Department specialising in high-technology and pharmaceutical company audits along with pensions and grant engagements.  In 2019, while on placement, I was on the Corporate Social Responsibility Committee, and worked under the food pillar of PwC Ireland’s Sustainability Council, focusing on food waste reduction initiatives primarily in PwC offices around Ireland.  I also became an SDG Champion with PwC by completing ‘The Sustainable Life School’ course. This course inspired me to apply for, and later become, a Climate Ambassador earlier this year, where I have equipped myself with education about climate. What does being named Chartered Star 2024 mean to you?  Being the Chartered Star, an ambassador of Chartered Accountants, means representing my profession and country on a global stage.  Having been selected to attend the One Young World Summit in Montreal this September, I am deeply honoured and grateful to have this opportunity.  The Summit brings together young leaders from around the world to discuss and address critical global issues, including sustainability, innovation and social impact. I am committed to making both my profession and my country proud by actively participating in the Summit, sharing insights and learning from global peers. This unique experience will enable me to bring valuable knowledge and innovative ideas back to my colleagues, fostering growth and development within our community.  I look forward to leveraging this platform to highlight the pivotal role of Chartered Accountants in driving sustainable and ethical business practices, ultimately contributing to a better future for all.

Lindsay Russell, a Partner with EY Northern Ireland, talks to Liz Riley about the evolution of her career, professional inspiration and constant thirst for knowledge, variety and challenge in her working life  My interest in accountancy was first sparked as a teenager. During school holidays, while doing my GCSEs and A Levels, my parents encouraged me to gain valuable work experience, which led to a job with WHR Accountants in Armagh under the tutelage of Ken Harrison, one of the founding partners.  WHR had a fantastic team of about 15 who took me under their wing and got me started with the basics of accounting.  After writing out many cheque journals, cash books and extended trial balances manually, I learned that “balancing” numbers gave me a great sense of satisfaction. Something clicked and I realised that accountancy was a career I wanted to pursue.  This summer job continued for four years and greatly influenced my decision to study accountancy at university in Scotland. After graduating, I was fortunate to secure a position with EY Northern Ireland in 2004 and completed my professional exams in 2006. It has been a real privilege to become a Chartered Accountant, specifically an auditor in practice.  As auditors, we are afforded an insight into so many successful organisations across sectors and industries and are in a unique position to support and work with talented individuals through complex and interesting transactions and business initiatives.   The trust we provide as accountants, auditors and business advisors is something that is often underplayed, but is vital to the capital markets and the success of organisations, and I still consider myself lucky to say I play a part in that.  Almost 20 years later in this profession, and I have not looked back. Championing women In those 20 years, I have seen significant changes in the gender profile of our profession, particularly in the last decade.  I am pleased to have been part of this change personally, but what I am really proud of is being able to champion and sponsor female talent within our profession to ensure that others can share in the experiences and opportunities I was afforded early in my career.  As a female partner and leader, I am acutely aware of the responsibility I have in championing other women in our profession. In the long term, my goal is that we create a profession, industry and world in which such an active focus on gender diversity is no longer essential because we have created an environment where opportunities are afforded equally to all people and are fulfilled based on the right person for the role, regardless of gender or any other characteristics.  However, I know we still have some way to travel to make this a reality. I fully appreciate and understand that we must create the right environment for all our talented people to flourish.  For example, organisations must take parental responsibilities and flexible working into consideration. They must do all they can to provide a workplace in which working mothers know they can have a sustainable and rewarding career. I would also highlight that, while gender diversity is important to me as a female leader, I believe that diversity of thought, background and experience is the basis for excellence in any team.  It is not only the experiences of diverse groups, but also their willingness to be open to the views and experiences of others, that creates the best and highest-performing teams, delivering the most for clients and helping to build a better working environment for all.  Embracing education in your career I believe professional development is achieved via a combination of formal learning and on-the-job development.  Formal learning is very important, particularly in our changing regulatory environment, and I find it useful to check my own Continuing Professional Development (CPD) monthly and quarterly to ensure I am on track for compliance.  However, I also find on-the-job learning critical in putting all the theory we learn into practice, and developing the wider skill set that is so valuable and necessary for the accountants of today and tomorrow.  We are living in a world in which technology and the way we work is continuing to evolve, particularly with the advent of generative artificial intelligence. My advice is to embrace change and learn as much as you can from those around you.  Lastly, I would say it’s important to remember that the accountancy skill set remains as valuable today as it ever was and will remain a key part of the workplaces and businesses of tomorrow.  The fluidity of work-life balance There is no magic answer to work-life balance. For me, work-life balance is something that is fluid and needs to be reassessed and flexed regularly and continuously.  I learned an important lesson early in my career: your work-life balance will have ebbs and flows depending on what is going on in both your work and home life.  It is important to be flexible at times and, at others, to know and stand by your “non-negotiables.”  I recognise that at certain times I will have busier and more demanding times in the office, and that it is important to stay focused for the benefit of my teams and my clients.  Equally as important is the need to have planned downtime. I am protective of this downtime when it arrives so I can make sure my family and friends get a fully committed version of me. Everyone will have different styles and different ways of working. My advice is to ensure you understand your own style. Know your peak times, take time out and ensure you communicate clearly with those around you, both personally and professionally, about your work-life balance needs.  Stepping outside your comfort zone When I look back over my career, I can see that my biggest development has come about when I have embraced new opportunities (or challenges) and have been pushed out of my comfort zone.  It is very easy to stay comfortable, but trying new things, seeking out new learning opportunities and working with different people and teams is what accelerates our development, and ultimately, our career prospects.  My career advice is to say “yes” and give it your all. You will always be amazed at where it can take you! It is sometimes the tasks or roles that you think you didn’t want – or didn’t think you would be good at – that are the ones that help you progress and move on to your next role.  I also like to remind people that variety and new opportunities can come from staying in the same job or profession and do not always require drastic change.  I have been with EY for almost 20 years now, which feels increasingly rare in a world where new opportunities are everywhere. I am proof that you can have a varied career with many different roles and opportunities all with the same employer and within the same profession. My final piece of advice is to be honest and true to yourself. Someone once told me to hold a mirror up and be honest with myself about my strengths and weaknesses and what I ultimately want from my career.  I realised early on that I get easily bored and need variety in my work. I know that I am competitive, hard-working and need to feel I am adding value. I recognise that this combination of attributes means I often work too hard.  However, it also means that I am continuously rewarded with challenging opportunities for development, which keeps me motivated and stimulated.  Everyone in our profession must figure out what works for them and remember that their career path, regardless of direction, should be unique to them. Your career doesn’t have to replicate what anyone else before you has done, or what those around you are doing today.

Cormac Lucey explores the misunderstood roots of Ireland’s FDI success and questionable management of surging tax revenues against the backdrop of rising state spending Two important aspects of Ireland’s multinational success story are generally misunderstood.  The first concerns the low-tax strategy that has been the key reason many multinationals have located in Ireland.  As Professor Frank Barry of Trinity College Dublin revealed in his essay “Foreign Investment and the Politics of Export Profits Tax Relief 1956”, this low-tax strategy resulted from then Taoiseach John A. Costello overruling the Department of Finance and forcing an idea promoted by the Department of Industry and Commerce into the Budget.  Underlining the precariousness and capriciousness of life, this strategy didn’t begin to really function until the 1990s.  The second aspect of our multinational story, not generally understood, is how utterly dependent our economy is on American business.  While it is widely known that more than 85 percent of the state’s corporation tax revenues come from multinationals, their contribution to other tax headings is not so well-known.  When you consider multinationals’ 55 percent share of Ireland’s income taxes and 54 percent share of VAT – and apply this lower 54 percent rate to other tax headings – you will see that the multinational sector contributes over 60 percent of the State’s total tax revenues.  How well is the state managing the resulting surge in tax revenues? Well, it’s all being spent, and then some.  According to the Irish Fiscal Advisory Council’s Fiscal Assessment Report published in June 2024, “Excluding excess corporation tax receipts, a deficit of €2.7 billion (0.9% GNI) is forecast for this year. This comes despite a strong economy, with record high employment and historically low unemployment. The question arises: if underlying surpluses are not being run now that the economy is strong, when would they be run?” The quality of much of this spending is highly questionable. The epicentre of rampant State spending growth is occurring in healthcare. A recent Department of Health report analysed hospital activity and expenditure between 2016 and 2022.  It reported a 3.8 percent increase in overall activity, compared with an inflation-adjusted rise in expenditure of 45 percent (nominal rise of 68 percent) and a 29 percent increase in staffing numbers. The Department of Health badly needs budgetary incontinence pads. Or maybe members of the Irish public service simply need to learn how to manage.  Consequence-free management is the key obstacle to effective budgetary control. When staff are treated the same regardless of whether they perform extraordinarily well or extraordinarily badly, should we be surprised when mediocrity results?  The Republic’s governing political class is happy to bask in the reflected glory of multinational-induced prosperity. However, according to the 2023 annual report from the IDA, Ireland’s inward investment agency, the global foreign direct investment landscape is becoming “increasingly challenging and complex.”  And, if he becomes the next US President, Donald Trump plans to significantly undermine Ireland’s attractiveness to US multinationals by putting a 10 percent tariff on US imports. Even though it accounts for 69 percent of employment, Ireland’s domestic sector of small and medium-sized enterprises (SMEs) is the orphan of this story. SMEs need targeted tax incentives along the lines of those outlined by Deloitte’s Kim Doyle in the Accountancy Ireland newsletter Briefly. The SME sector also needs a systematic programme to reduce the regulatory burden imposed upon it. Under the guidance of Michael Diviney, Chartered Accountants Ireland recently published Reducing Red Tape, a detailed position paper showing just how that could be done.  The instinctive mindset of government – that ministers are in charge of a great national trainset they can play with at will – flies in the face of the reality that policy decisions involve tricky trade-offs not amenable to facile headlines.  Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland *Disclaimer: The views expressed in this column published in the August/September 2024 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor.  

Ireland’s medium-sized businesses are more optimistic than their global peers but a more ambitious approach is needed to deliver their expectations, writes Patrick Dillon Ireland’s medium-sized businesses are uniquely optimistic in their outlook ahead of the upcoming US presidential elections and in the wake of the recent elections in France and the UK.  Just 17 percent see geopolitical disruptions as a barrier to growth, compared to 42 percent in the Eurozone and 49 percent globally. This confidence follows through in the main findings among the Irish respondents to our latest Grant Thornton International Business Report (IBR), which captures insights into the outlook of 10,000 mid-market firms across the globe.  Our Irish IBR respondents are optimistic about the outlook for the Irish economy in the 12 months ahead. Close to three-quarters (73%) of the Irish medium-sized companies we surveyed predict a positive future. The findings are reflective of the resilience of Irish companies that have had to navigate a polycrisis in a short period of time, trading through the pandemic, cost-of-living challenges and disruption to global supply chains. This is not just a case of looking at the world through rose-tinted glasses, however. Irish medium-sized companies are anticipating a healthy bottom line over the next year.  Close to three-fifths of the Irish companies we surveyed predict a rise in revenues (57%), profits (59%), and headcount (52%) in the 12 months ahead. While it is fantastic to see such a strong sense of confidence among this cornerstone of the Irish economy, if the last few years have taught us anything, it is that none of us knows what’s around the corner.  To this end, the companies that will continue to succeed in the future will be those that remain hyper-focused on staying one step ahead of the competition – and this is where our International Business Report makes for slightly more concerning reading.  There is a significant difference in attitudes to innovation among Irish firms compared to their international peers. Just under a quarter (24%) of Irish businesses are preparing to increase investment in research and development over the next twelve months compared to three-fifths (60%) of their global peers.  We found a similar gap in levels of planned technology investment, with just under half (48%) of Ireland’s medium-sized firms budgeting for an increase, compared to 67 percent globally. Ireland is a small pool compared to the ocean that is the global marketplace. If Irish firms are to realise their ambition and potential, then they need to look to new markets.  Investing in innovation is key to unlocking these opportunities, whether it is leveraging digital channels to reach customers in every corner of the world or developing tailored products or services for a specific customer segment internationally.  A confident economic outlook is great, but it doesn’t put money in your pocket. To paraphrase Benjamin Franklin, an investment in innovation pays the best interest.   Patrick Dillon is Head of Deal Advisory with Grant Thornton Ireland *Disclaimer: The views expressed in this column published in the August/September 2024 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor.