September Trade & Investment Report
Brian Cotter - Public Affairs Director
Recent exchequer figures have underlined the growing sense of positivity surrounding Ireland's economic prospects in 2014 and beyond. Improvements to our international competitiveness rankings help to echo the positive international profile that Ireland continues to navigate its economic challenges successfully. This fiscal loosening presents a timely opportunity to consider actions to improve Ireland's competitiveness by signalling a determination to preserve the business case for further investment and employment growth, retain and attract key talent, win additional R&D-led inward investment and encourage global firms to develop and commercialise their intellectual property ("IP") from Ireland. The lens to assess budget priorities must be measures that encourage certainty that Ireland will not risk the recovery with measures that suit the political cycle, rather than promoting long term and sustainable investor and consumer confidence that Ireland will be a very competitive, certain and compelling place to operate from, work productively and live.
Key Economic Indicators
Arrow Direction indicates direction of trend;arrow colour indicates whether trends are perceived as positive (Green) or negative (red).
(f) = forecast
All Irish figures sourced from Central Bank of Ireland Quarterly Bulletin
The American Chamber has made its annual Pre-Budget Submission to the Department of Finance. In it we call for a number of crucial items to be addressed. Budget 2015 presents a timely opportunity to improve Ireland's competitiveness by signalling a determination to preserve a compelling business case for further investment, retain and attract key talent, win additional R&D-led inward investment and encourage global firms to develop and commercialise their intellectual property ("IP") from Ireland.
Our key budgetary asks: The marginal rate of personal tax must be reduced, with a roadmap put in place by Government to a lower future tax burden. Changes to the SARP and R&D Tax Credit regimes are essential to ensure we can attract the types of investments we need to remain a world leading location for business. We must ensure that the direction of pension policy encourages savings and does not dissuade experienced leaders from remaining in Ireland. Finally, the Government must tackle the rising cost of private health insurance and energy. You can read the full submission here (pdf).
Revenues reflect continued growth
The continued recovery of the economy was once again reflected in the end of August exchequer returns.Total tax revenue of €24.9b was collected to end-August, an increase of €2,004m (8.7%) on the same period last year. In addition, cumulative tax revenues are €971m (4.1%) ahead of target. In regard to August, tax revenues were €423m (20%) above the monthly target. The Department caution that this was flattered by delayed stamp duty receipts and once off non-reoccurring corporation tax receipts. The Exchequer deficit for the first 8 months of the year stood at €6.3 billion, €1.3 billion ahead of profile.
The Central Bank became the latest organisation to upgrade their GDP growth forecast for 2014. Following the positive revisions of a number of other bodies, in its latest quarterly bulletin the bank stated it expected the economy to grow by 2.5% in GDP terms this year, which is 0.5% higher than its previous forecast. The bank predicts GDP growth of 3.3% in 2015.
Sources: Department of Finance, Central Bank of Ireland
WEF upgrades Irish competitiveness ranking
Ireland has been ranked the 25th most competitive country in the world by the World Economic Forum (WEF), representing an improvement of three places on 2013's ranking of 28th. Despite this improvement our overall ranking continues to be weighed down by ongoing debt and deficit dynamics. Beyond that there is clearly room to improve our performance in a range of areas such as innovation and labour market efficiency.
Switzerland continues to be ranked as the most competitive economy, followed in second by Singapore and the US in third place. Finland and Germany round out the rest of the top five. You can read the full report and individual country profiles here.
Source: The World Economic Forum
Manufacturing improves at rate last seen in 1999
The Investec Manufacturing Purchasing Managers' Index (PMI) rose to 57.3 in August from 55.4 in July, and signalled the sharpest monthly improvement in operating conditions since December 1999. Business conditions and employment figures have now strengthened in each of the past 15 months. A fifteenth consecutive monthly increase in manufacturing production was also recorded in August, with the rate of expansion quickening to the sharpest in three-and-a-half years. Output growth was primarily driven by increased new orders.
The Investec Services PMI rose to 62.4 in August, up from 61.3 in July, as demand from the US and UK helped continue expansion in the key services industries. The rate of expansion in business activity in the Irish service sector was the second-fastest since February 2007. Activity has now increased in each of the past 25 months.
Sources: Investec, The Irish Times
US firms dominate IEA rankings
Members of the American Chamber continue to dominate the annual Irish Exporters Association (IEA) export rankings with 14 US firms filing spaces in the top 20. The IEA Top 250 Exporters report found Google at the top of the listing with Microsoft in second place followed by Johnson & Johnson. The report helps to underline the crucial importance of American Chamber members to Ireland's exports and economic health. You can read the full report here.
Source: Irish Exporters Association
DJEI FDI statement sets out policy priorities
In July the Department of Jobs, Enterprise and Innovation launched its Policy Statement on Foreign Direct Investment in Ireland. The statement is a welcome signal of longer term thinking on the part of the Department about how Ireland needs to remain competitive for continued FDI flows. In his introduction Minister Bruton states that "We will maintain a focus on managing our relative cost competitiveness and we remain committed to maintaining an open, transparent, stable, and competitive corporate tax regime."
The statement features a welcome focus on talent, connected world leading research, and place-making to provide attractive city regions to live, work and attract investment. DJEI also commit to strengthening their approach to sectoral ecosystem development and to effective execution. You can read the statement here.
Source: Department of Jobs, Enterprise & Innovation
Alien Vault, an internet security firm, is to establish a new EMEA sales and technical support centre in Cork, leading to the creation of 40 roles in the coming year. Headquarted in California, the company, which is the creator of an open source security information and event management system 'OSSIM', recently hired its first 12 employees in Ireland, including sales, sales engineers, tech support and management personnel.
Coupa Software, a leading provider of cloud applications for finance, has announced the opening of a new European customer support hub in Dublin. EMEA was Coupa's fastest-growing region during the first half of 2014 and the Dublin centre will help Coupa address requirements particular to the European Union such as data privacy and protection regulations.
Itron, a technology and services company dedicated to the resourceful use of energy and water, is establishing a Global Business Services (GBS) centre in Cork, creating up to 40 jobs by the end of this year. The company, which manufactures metering devices for measuring water and energy usage, is seeking experienced professionals to join its Cork team at its new facility in Mahon. Positions will include accounting, financial controls and financial administration.
MDS Global Technologies is to create 25 new jobs with the announcement that the company will locate all global sales and technical support functions in the Kells Enterprise Technology Centre. The company transports IP data using existing infrastructure and networks. The investment is in connection with SmartStart which works with start-ups to provide business development guidance.
Source: Silicon Republic
SWG, a Philadelphia-based company that works with customers to grow their telecommunications networks, repurpose, reuse and recycle their existing telecommunications equipment, is establishing a presence in Meath. The company is set to create 25 new jobs in the Kells Enterprise and Technology Centre. SWG is part of SmartStart, an Irish centric global accelerator programme for high-potential technology companies.
Source: Silicon Republic