According to breaking economic growth figures, by end of 2015 Ireland’s was fastest growing economy in the world
Ireland has posted breaking economic growth figures – the strongest since the height of the Celtic Tiger in 2000 and the highest in the EU – according to official statistics. In the final quarter of last year it was the fastest growing economy in the world. At the same time it has recorded the biggest rise in industrial production across the EU.
Brussels’ statistical watchdog, Eurostat, says industrial output in Ireland was up 42 per cent versus an annual increase of 2.8 per cent for the euro zone and a 2.5 per cent rise for the European Union as a whole.
But Irish economic forecasters fear a British withdrawal from the EU could take a whopping 20 per cent out of the Irish economy, wiping out the gains of the post- Crash recovery. Last week a pro-EU campaign led by Irish people in Britain, Irish4Europe, launched what it said is a positive, civic campaign to explain to co-workers and neighbours why they should vote to remain in the 23 June Brexit referendum.
They leafleted and canvassed the record-breaking crowds at Trafalgar Square’s Saint Patrick’s Festival on Sunday. Ireland and the UK do €65 billion of trade every year, roughly a billion pounds a week. Last October an independent Irish economic think tank the Economic and Social Research Institute (ESRI) said Brexit could take at least 20 per cent out of the Irish economy.
This would be at a time when Ireland is emerging from the economic meltdown caused by the collapse of its banks and property markets in 2008 which has caused at least 250,000 Irish to emigrate – many of them to this country. Last week Ireland’s Central Statistics Office (CSO) released preliminary figures showing the country’s economy powering out of recession with GDP growth of 7.8 per cent for all of 2015 – by far the fastest in Europe for the second year in a row. Growth was especially strong in the last three months when it jumped from an average of 1.5 per cent to 2.7 per cent.
The large presence of international companies means GDP measurement overstate growth as their profits are transferred out of Ireland to their shareholders. Gross national product, which excludes the contribution of multinationals and is a more accurate picture of the domestic economy than GDP, expanded by 5.7 per cent – still way ahead of the UK and the eurozone.
In 2015, Ireland recorded a 28.2 per cent increase in investment spending but much of this was accounted for by “intangibles” or “research and development, computer software, original works of art including musical and literary works, mineral exploration.”
This €10 billion boost was attributed to several multinationals, many from the US, moving their intellectual property rights to Irish legal entities to avail of tax advantages. Last November two US pharmaceutical giants Pfizer and Allergan agreed a $160 billion merger that allows Pfizer to move its tax address to Ireland. The deal is structured so that Dublin-based Allergan technically bought New York-based Pfizer.
Ireland’s corporate tax rate is 12.5 percent, compared with the U.S. rate of 35 percent. In reality, little of this investment actually made its way into the pockets of Irish workers who have actually seen weak wages growth although the statistics show they are beginning to spend more. Nevertheless 88,000 householders are in arrears on their mortgages and 190,000 people cannot get employment. A breakdown of the figures shows Ireland’s manufacturing industry recorded an annual 14.2 per cent increase in value terms, while building and construction recorded an 8.8 per cent rise.
The rates of growth for construction are similar to 1997 just before the rampant speculative property development that led to the crash but from a very much smaller base as the rate of construction of homes in Ireland is still lagging far behind demand because builders say they can’t make a profit.
Unlike the Tiger Years when economic growth figures were swelled by property sales these latest figures reflect more evenly distributed growth, largely driven by a surge in activity and exports among Ireland’s huge foreign direct investment sector, especially information technology and pharmaceuticals.
Companies in the distribution, transport, software and communications sectors increased by 8.7 per cent, agribusiness by 6.4 per cent, and the services sector by 4.3 per cent. Public administration and defence declined by 2.6 per cent.
Personal consumption, which accounts for 55 per cent of domestic demand, rose by 3.5 per cent while government expenditure fell. Total consumer demand increased by 9.3 per cent, imports grew by 16.4 per cent, ahead of exports, which grew by 13.8 per cent.
The CSO also said Ireland had balance of payments current account surplus of €9.548 billion for 2015, an increase of €2.7 billion on 2015