Forecasting seems a bit pointless these days. Last April we were worried about US president Donald Trump’s tariff policies and the potentially dire implications for Ireland.

Now the latest figures show that growth continued apace in the Irish economy and corporation tax keeps rolling in to the exchequer. Against this backdrop, here are the things that we need to watch out for in 2026.

Donald Trump

The impact of Trump’s tariff threats last year turned out to be less serious than expected and a deal with the European Union settled things down a bit. A weaker US dollar – another one to watch in 2026 – was a greater cost for many Irish exports. The threat of inflation in the United States and its impact on voters may also be staying Trump’s hand in terms of tariffs. But his aggressive approach to trade policy remains in place and the administration will continue to try to find ways to put pressure on American firms to relocate investments to the US and to pay more tax to Washington.

Early in 2026 the US Supreme Court will provide a vital ruling on Trump’s tariffs agenda and whether he has exceeded his powers in applying many of them. He could lose, leading to uncertainty about his key trade weapon. The administration says it can find other ways to impose the blanket tariffs which are the subject of the court decision, but if Trump loses it will be messy and will probably require the US to repay companies who have paid tariffs under the headings involved, which include the 15 per cent charge on many Irish exports to the US,

Worth watching too will be whether the EU-US trade deal can bed down – or whether tensions build, particularly on the pace at which the EU is implementing the promised tariff cuts for US firms.

Separately, the regulation of US digital service firms in the EU is another hot issue. Here, foreign direct investment trends will be vital – is the pace at which new projects are arriving slowing down?

For Ireland, the direction of travel from the US administration remains worrying. Trump’s philosophy of economic nationalism carries obvious risks for Ireland, which positions itself as a bridge for US exporters to the EU and a key location for their international profit management. And so signals on US trade and tax policy remain vital.

More broadly, the growing political and ideological rift between Washington and Europe may have a longer-term economic impact. How far, for example, will Trump’s team push their argument that the EU is being unfair to American big tech and trying to shut down free speech? A transatlantic split on social media would have significant implications for Ireland.

Irish growth

There had been signs – particularly from jobs market data – that the Irish economy had hit a softer patch in the second half of this year. However, recently-published Central Statistics Office (CSO) figures for the third quarter of the year suggest that growth remained strong enough heading into the autumn, with the domestic economy – as measured by modified domestic demand – growing by 2.3 per cent in the July to September period, compared with the previous three months.

As well as corporation tax, income tax returns for the key month of November were also strong, though the CSO labour force survey suggests a slowdown of annual jobs growth to just 1.1 per cent in the third quarter. Some of this seems a bit contradictory, so a key issue to watch in the early months of 2026 is the pace of growth of the Irish economy and whether some kind of slowing is, indeed, taking place. It appears that some easing in growth is – not surprisingly – taking place, but the extent of this should be clear by next spring.

Given the pressure on housing and infrastructure, a growth slowdown would be welcome – provided it does not turn into something nasty.

Leprechaun returns

Whatever about the real state of the Irish economy, the topline GDP figures, used for international comparisons, remain in a world of their own, dominated by massive international profit shifting by big multinationals, which distorts much of the data.

International attention will again be on Ireland when final GDP figures for 2025 are published. This had been expected to show an annual increase of around 10 per cent, but the strong third-quarter figures have led brokers to think it could be even higher, with Davy saying its call of a 13 per cent GDP rise may not be far off the mark.

With EU economic growth running at around 1.5 per cent, Ireland is an outlier and, despite being a small economy, we can even influence overall EU-wide data in some areas. So there will be a fuss when the figures come out and more talk of “Leprechaun economics” – the famous phrase coined by US economist Paul Krugman when Irish figures first went off the charts in 2015.

Expect more EU data being produced with a footnote that Ireland is excluded and more noise from Washington about how US firms are using Ireland as a base to produce vital products in areas like pharma and tech and to pay tax at a lower rate than in Washington.

The housing market

How many words have we read on this topic in 2025? Don’t expect that to change. The chronic shortage in many areas of the market meant prices continue to rise by around 7.5 per cent. Much of the activity is being driven by first-time buyers, with an ongoing shortage of supply in the second-hand market leaving them with the choice of moving a long way from city centres or competing with mover-purchasers for limited second hand stock.

Will affordability based on Central Bank borrowing limits finally slow the market in 2026? Or does the shortage of supply means it just keeps on going? At the top end, some retrenchment in the tech sector is having an impact, but mid-range properties continue to sell like hot cakes. Unless the jobs market takes a turn for the worst, it could be more of the same in early 2026 at least.

Meanwhile, we will watch to see does the Government’s revised housing plan and its promises to build things more quickly increase the pipeline of new homes for the next few years.

The AI bubble

Can AI power equity markets yet higher or will 2026 be the year when the bubble bursts? No one disputes the fundamental power of AI to reshape industries and drive productivity – though its potential impact on employment, especially at the entry level, is a concern.

But the question is whether market valuations have run too far ahead? Is too much “hope” value being placed on AI and not enough cold rationalisation of where and when it can give a meaningful boost to productivity and profits?

Lingering in the background are the familiar threats of high international levels of government debt, geopolitical turbulence and the uncertainty of what will emerge next from Washington. In its annual outlook for 2026, UBS Securities, the investment house, says the question is whether the boost from AI can provide the “escape velocity” needed to the world economy to break free of these traditional constraints.

It remains guardedly optimistic, warning that risks remain. More pessimistic forecasters will look with some suspicion at the philosophy encouraging investors that “this time is different”. The more markets inflate in 2026, the greater the risk. And with more and more AI investment based on borrowings rather than equity, risks are creeping higher. This is one to watch carefully.

The risks

If the financial markets hit trouble, where are the weak points that could cause trouble that we should watch? Traditional banking is subject to much more intense regulation after the 2008 financial crash, as are many retail investments. Instead, analysts are more focused on non-bank financial operators, such as investment funds and specialist investors, lenders and financiers. At a basic level, people getting car finance typically do so from a non-bank lender – for example, the financing arm of one of the big car makers – and many SMEs get funding from them in areas like asset financing or property.

It is in the “higher ticket” end of the market where concerns lie, including exposure of some funds to a downturn – many are highly leveraged and have long-term investments but have investors who may seek money back quickly. This it the typical “ mismatch” that can cause big trouble.

They also have highly interconnected holdings in each other.

And as well as providing financing outside the traditional banking system, non-bank financiers are also providing new means of intermediation and exchange through digital currency platforms.

We saw towards the end of the year how volatile cryptocurrencies like bitcoin can be. And another type of digital currency – stablecoin – which offers investors a link to a “real” currency – thus far almost always the US dollar – also carries risks.

In this case, the currency operator needs assets to back the currency and generally these are held in US treasuries – or government bonds. The concern here is a sell-off of these holdings if a large number of stablecoin investors look for their money back at the same time.

The 2008 financial crash taught us the importance of how trouble in the more exotic areas of finance can quickly feed through to the wider economy.

Money

Linked to this is the future of the money we use. Here again crypto and stablecoin bear watching and the extent to which they replace traditional payment systems in international transactions. So, too, does the EU plan for the digital euro, for which it is still trying to win wider public acceptance. A strategic worry for Europe – and one of the reasons for the development of the digital euro – is the control the US has on many of the digital settlement channels for international transactions.

In a fractured world, this is seen as a vulnerability, so expect the EU to push ahead with the digital euro and European banks to persist with their plans for a euro stablecoin. How these two projects sit together is a question. And again, here, the shadow of Donald Trump looms large in the strategic calculations.