{"id":378118,"date":"2026-01-19T07:26:22","date_gmt":"2026-01-19T07:26:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/378118\/"},"modified":"2026-01-19T07:26:22","modified_gmt":"2026-01-19T07:26:22","slug":"economic-frailties-laid-bare-to-simon-harris","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/378118\/","title":{"rendered":"Economic frailties laid bare to Simon Harris"},"content":{"rendered":"

There are \u201cfundamental weaknesses\u201d in the Irish economy including a narrow tax base and a flatlining of employment growth, the new finance minister has been warned.<\/p>\n

In a briefing for Simon Harris put together by senior officials, the Fine Gael leader was also warned about high levels of public spending and a lack of budgetary discipline.<\/p>\n

Harris was warned that employment growth had effectively \u201cflatlined\u201d since last spring and that unemployment had ticked upwards, reaching 5 per cent in the third quarter of the year, up from 4.5 per cent in the first quarter. <\/p>\n

He was told that the data appeared to suggest that an uncertain geopolitical environment was having an impact on labour demand, with firms delaying or reducing hiring in the face of economic uncertainty. \u201cWhile employment has grown on an annual basis, there has been a significant moderation in employment growth in the last two quarters,\u201d the briefing said. Employment is expected to expand by 1.5 per cent this year.<\/p>\n

On President Trump\u2019s tariffs<\/a>, it was pointed out that the US is Ireland\u2019s single largest trading partner in terms of goods exports, with about \u20ac74 billion exported to America in a year. Because of the tariffs, the level of employment would be about 60,000 lower compared with a scenario in which tariffs were not introduced by 2030.<\/p>\n

Harris was also told that while the public finances seemed \u201crelatively good\u201d on the surface, below the surface there were \u201cfundamental weaknesses\u201d that persisted.<\/p>\n

\u201cThe tax base is extremely narrow, with several tax expenditures contributing to the narrowness of the base. The headline fiscal position is heavily reliant on volatile \u2018windfall\u2019 corporation tax receipts, making the public finances highly vulnerable to a shock to the multinational sector.\u201d<\/p>\n

\"Donald<\/p>\n

Ireland\u2019s high proportion of exports to the US means it is especially vulnerable to the effects of Trump\u2019s tariffs<\/p>\n

BRENDAN SMIALOWSKI\/AFP\/GETTY IMAGES<\/p>\n

Ten years ago corporation tax receipts amounted to about \u20ac4 billion or \u20ac5 billion a year, but they now exceed \u20ac30 billion. \u201cA handful of large firms account for over half of this. The multinational sector also accounts for a significant proportion of income tax and VAT receipts: as such, any negative shock to the multinational sector would have implications for the public finances.\u201d<\/p>\n

In terms of corporation taxes, ten firms account for nearly \u20ac1 in every \u20ac6 that flow to the state.<\/p>\n

\u2022 Irish budget 2026: Developers pin hopes on tax breaks<\/a><\/p>\n

There are further pressures on the Irish tax system too. Beyond the near term, \u201cfiscal headwinds are mounting\u201d. Harris was told that structural change in the economy on demographics, decarbonisation, digitisation and deglobalisation would involve big challenges for the public finances. This will involve a large increase in public expenditure, which weights on tax revenue.<\/p>\n

The tanaiste has also been warned about rising levels of public expenditure. That has increased from \u20ac67 billion from just before the pandemic to \u20ac118 billion for next year. \u201cIn-year spending drift has contributed to a lack of budgetary discipline,\u201d Harris was told.<\/p>\n","protected":false},"excerpt":{"rendered":"There are \u201cfundamental weaknesses\u201d in the Irish economy including a narrow tax base and a flatlining of employment…\n","protected":false},"author":2,"featured_media":378119,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-378118","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/378118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=378118"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/378118\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/378119"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=378118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=378118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=378118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}