Geopolitical Risk

Ireland Country Report

Country Report Dec 2023

Country Risk Report – December 2023

GDP (2021)

$4.23 trillion
$33,815.30 per capita – 1% growth

State Department Travel Advisory Level

Level 1 – Exercise Normal Precautions

Corruption Index Score (2022)

73/180

Anti-Money Laundering/Terrorist Financing

FATF Member

Property Rights Index

13/125

Freedom House Ranking

Free

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Ireland

Country Risk Report – March 2024

GDP (2022)

$533.14 Billion

State Department Travel Advisory Level

Level 1: Exercise Normal Precautions

Corruption Index Score (2022)

10/180

Anti-Money Laundering/Terrorist Financing

FATF Member
(Financial Action Task Force)

Property Rights Index

17/125

Freedom House Ranking

Free

 

Ireland - Geopolitical Risk Overview

The Republic of Ireland became independent in 1922 after its succession from Great Britain. Importantly, Ireland’s independence means it has retained its membership in the European Union (EU), whereas Northern Ireland has not, resulting in trade, labor, and migration challenges between the two nations. 

Ireland faces similar geopolitical risks to the rest of Europe. Its most significant risks come from the disruption of the EU multilateral system stemming from Brexit, social cohesion, climate change, and cybersecurity

Unlike the rest of Europe, Ireland faces unique challenges from its relationship with Northern Ireland and Brexit.

Ireland maintains a strong reputation for attracting foreign investment due to its low corporate tax rate, EU market access, and highly educated English-speaking workforce. It is also known for its ease of doing business, which is attractive to foreign firms. These factors contribute to its relatively high GDP (ranked 25th globally). 

Ireland’s friendly business environment and highly educated workforce have been particularly attractive to major US tech and IT services firms, including Google, Apple, and Microsoft. 

 

Ireland & Northern Ireland

The United Kingdom’s exit from the EU has significantly impacted the legal relationship between Ireland and Northern Ireland. 

After decades of conflict, the two struck a peace deal 1998 known as the “Good Friday Agreement.” This agreement confirms that Northern Ireland remains part of the UK but that the two could be reunited if supported by a majority vote in both Northern Ireland and Ireland. 

The Good Friday Agreement creates a shared governance structure entailing three strands that govern and create various institutions. Strand One governs Northern Ireland, Strand Two creates cooperation between Northern Ireland and Ireland, and Strand Three brings together leaders from the UK and Ireland. Under these strands, Ireland, Northern Ireland, and the UK cooperate in over 140 areas, including health care and energy. 

Now that Northern Ireland is no longer part of the EU, it is not a party to the EU customs union, which forms the basis for standard tariffs on all goods entering the bloc. Due to the sharing of common EU customs laws, people and goods moved freely between Northern Ireland and Ireland for years. Now, customs checkpoints between Ireland and Northern Ireland are necessary. 

In 2021, checkpoints were set up between Northern Ireland (along the Irish Sea) and the UK. This angered Northern Irelanders loyal to the UK because they saw the checkpoints as creating a division between Northern Ireland and the UK. This grievance sparked riots in Belfast, where a bus was lit on fire, and masked individuals hurled homemade bombs.  

In 2023, the EU and UK struck a new agreement known as the Windsor Framework. Under this framework, goods in Northern Ireland would be exempt from checks while those heading to Ireland would be inspected. Tensions remain despite this new system, which removes the feared division between Northern Ireland and London.  

Further escalation between Ireland and Northern Ireland would generate significant instability within the two countries. From the outside, the situation does not appear particularly dire. However, years of fighting and thousands of deaths have created longstanding grudges and distrust between them. From the 1960s to the late 1990s, the conflict killed more than 3,500 people. 

A recent data breach has illuminated the ongoing reality of the divide. In response to a Freedom of Information request, the Police Service of Northern Ireland shared the names of all officers and staff and their addresses. This list was later published online. This is particularly troubling, and even life-threatening, to officers because they remain under threat from republican paramilitaries. 

In the short term, this means enhanced personal risk for individual officers; in the long term, actions against officers or post-Brexit developments could spark riots, creating regional instability.

 

National Debt

Ireland’s public debt burden is among the highest in the developed world per capita. Despite the declining debt-to-income ratio, it still stands at €226 billion, an estimated 86 percent of national income. Government spending and humanitarian expenditures on the war in Ukraine have accelerated this problem. 

Ireland’s Minister for Finance, Michael McGrath, has explained that there are “significant risks” to public finances in the short and long term. Because Ireland’s finances are highly reliant on corporate tax receipts, they are vulnerable to shocks in Ireland’s multinational corporate sector. 

Further, the Department of Finance estimates that corporate tax receipts could be a “windfall,” meaning that the government must carefully calibrate its fiscal policy, considering the changing nature of corporate tax receipts. 

 

Business Environment and Investment Opportunities 

Ireland’s friendly business environment has attracted significant foreign investment, particularly from the United States. In 2021, American FDI was worth over $550 billion, with over 200,000 people employed by US companies and their subsidiaries. 

Ireland has seen significant investment in the tech industry and is one of the top foreign destinations for US tech and IT firms. Other important industries include chemicals, pharmaceuticals, medical devices, and financial services. Here’s a breakdown:

  • Tech and IT Industry: Most of the US’s major tech firms are established in Ireland. Favorable tax laws, including tax incentives for research and development, are particularly attractive for tech firms. This has led to it becoming one of the world's leading destinations for tech R&D.

  • Pharmaceuticals and Biotech Industry: Nine out of ten of the world’s largest pharmaceutical companies operate in Ireland. Ireland’s proximity to the EU market, Great Britain, and the Atlantic Ocean links the EU and British markets to the US. Its highly educated English-speaking workforce makes it a particularly attractive destination for US firms.

  • Chemicals: Chemical exports account for a significant portion of Ireland’s export economy. Ireland is the world's third-largest exporter of organic chemicals, with most exports going to Great Britain and Western Europe.

  • Financial Services: Many leading financial institutions, payment companies, and fintech companies have established themselves in Ireland for many of the same reasons as tech firms, including a favorable business environment. Financial services firms have succeeded in Ireland because of the extensive network of support companies, including IT services. 

 

Considerations for US Businesses

One of Ireland’s most significant geopolitical risks comes from the tension between Ireland and Northern Ireland. Brexit and its ongoing challenges have stoked long-standing tensions, which could threaten the stability of Irish society. 

Ireland’s public debt is among the highest in the developed world, and corporate tax receipts largely support public finances. Ireland must carefully consider fluctuations in corporate tax receipts when developing fiscal policy.

Ireland’s highly educated English-speaking workforce is attractive to US firms seeking to access the greater EU market. Its geographical situation between Great Britain, Western Europe, and the US makes it a logical destination for facilitating trade between the two regions. 

In developing fiscal policy, Ireland must reconcile its sizeable public debt with inflation and transition to a low-carbon economic model, which will require significant public investment. While Ireland may want to raise interest rates to curb inflation and reduce debt, this could reduce its ability to stimulate growth. As such, businesses should watch for changes in interest rates in Ireland in the short and medium term. 

Finally, if your firm is considering expanding its operations in Ireland or the EU, it will be important to gain a deeper understanding of the added regulatory risks associated with conducting business in the region. It will also be important to factor in privacy considerations as you conduct your pre-investment due diligence. Infortal Worldwide can help you alleviate the burden by solving risk before it starts.™  



Want To Know More?

For a deeper review of political, economic, due diligence and security risks for Ireland, please contact us.

 

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