Ireland Macroeconomic Knowledge Flashcards
What is Ireland’s recent trade performance and what are the risks?
Trade surplus: €90.2bn (2024)
Exports: €223.8bn, Imports: €133.6bn
Strong in pharma and tech exports
Risk: 25% US tariff on Irish pharma in 2025
Threat to €18bn trade and 80,000 jobs
How is Ireland performing on inflation and what measures have been taken?
As of February 2025, Ireland’s inflation rate is 1.8%, down from 1.9% in January 2025.
The ECB’s inflation target is 2%, and Ireland is in line with this target.
The government introduced €450 in electricity credits per household to help ease cost-of-living pressures.
Grocery inflation fell to 2.3% in January 2025 due to increased competition among supermarkets and improvements in supply chains.
What is Ireland’s recent GDP growth performance and what are the main drivers?
GDP growth: 2.3% in 2023 (recovery from 2022 contraction)
Driven by pharmaceutical and tech exports
US multinational investment fuels expansion
Consumer spending picked up post-inflation decline
GDP sensitive to external demand and US policy
How has Ireland performed in terms of unemployment and employment trends?
Unemployment: 4.3% (2023) – near record low
Strong job growth in construction, ICT, and healthcare
Youth unemployment remains higher at ~11%
High levels of labour force participation
Net migration supports labour supply and fills skill gaps
What is the income inequality situation in Ireland?
The richest 20% of the population earn 3.8 times more than the poorest 20% in 2024.
Dublin wages are significantly higher than those in rural areas, highlighting regional disparity.
In 2024, 15.7% of the population experienced enforced deprivation, with higher rates among single-parent households, the unemployed, and renters.
What are the key sustainability initiatives in Ireland?
Ireland aims to shift to 80% renewable electricity by 2030, as part of its Climate Action Plan 2023.
In 2024, wind energy accounted for 32% of Ireland’s electricity demand.
The government is investing in offshore wind projects and grid infrastructure to support green energy expansion.
What are the key issues and government responses related to housing in Ireland?
Budget surplus in 2023: €8.3bn – mainly due to high corporate tax revenue
Debt-to-GDP: ~44% (one of lowest in EU), but GNI* ratio higher (~81%)
Surplus used to build sovereign wealth fund for future risks
Risks: overreliance on multinational tax income
Spending pressures from ageing population and housing needs
What monetary policies has the European Central Bank (ECB) implemented in 2024-2025, and how do they impact the economy?
The ECB reduced interest rates six times between June 2024 and March 2025, from 3.75% to 2.5%.
Lower interest rates increase aggregate demand (AD) by making borrowing cheaper, which encourages spending and investment.
No quantitative easing (QE) was used from 2023-2025; the ECB relied on interest rate adjustments to boost economic growth.
What fiscal policies have been implemented in Ireland in 2024-2025?
Capital Gains Tax (CGT) Adjustments: Enhanced relief for angel investors in start-ups, increasing the lifetime limit from €3 million to €10 million.
Fuel Allowance Support: €33 weekly allowance to 409,000 households until April 2025.
Cost-of-Living Measures: No new €2.2 billion cost-of-living package or tax cuts in Budget 2026.
What are Ireland’s market-based supply-side policies, and what impacts do they have?
Competition (Amendment) Act 2022: Strengthened powers of the Competition and Consumer Protection Commission (CCPC).
- Improves market efficiency by reducing anti-competitive behaviour, boosting productivity.
Compliance costs for small firms could rise, potentially affecting their profitability.
Labour Market Flexibility: Efforts to make hiring/firing easier and improve worker mobility.
- Reduces structural unemployment by promoting flexibility in the labour market.
May lead to exploitation of workers if protections aren’t in place.
What are Ireland’s interventionist supply-side policies?
Capital Gains Tax Relief (Budget 2025): Increased CGT relief limit for angel investors from €3m to €10m.
Fuel Allowance Scheme: €33 weekly for 409,000 households (Sept 2024–April 2025).
Renewable Energy – Climate Action Plan 2023: Targets of 15 GW wind and 8 GW solar by 2030.
Dublin Airport Third Runway (2022): Improved connectivity with international markets, particularly for high-value exports like pharmaceuticals and tech.
What is Ireland’s specialisation and trade situation?
Specialisation in pharmaceuticals, ICT, agri-food, and financial services.
Strong exports due to EU market access and global trade deals.
Vulnerability to global shocks (e.g., Brexit, US trade policies).
High exports in services, especially business and financial services.
Geographic advantage for global companies in tech and pharma.
What affects Ireland’s terms of trade?
Global inflation and rising import prices (e.g., energy post-Russia-Ukraine).
Deterioration in terms of trade, increasing import costs.
Imported energy (gas and oil) significantly impacts living standards.
How has Ireland’s Terms of Trade (TOT) been affected?
Global Inflation & Rising Import Prices: Imported energy prices surged during 2022-2023 due to the Russia-Ukraine conflict.
Deterioration in TOT: Higher cost of imports relative to exports.
Impact: Reduces purchasing power and lowers living standards.
Ireland’s Vulnerability: Particularly impacted as Ireland imports all its gas and oil.
How does Ireland benefit from being part of the EU and Eurozone?
Access to the Single Market
Receives CAP subsidies
EU membership boosts negotiating power
Post-Brexit: Northern Ireland gets access to both UK and EU markets, but more checks between NI and GB
How does the exchange rate impact Ireland’s economy?
Ireland uses the Euro (€) with a floating exchange rate
Strong euro = harder to export
Exchange rate controlled by the European Central Bank (ECB)
What factors contribute to Ireland’s international competitiveness?
Low corporate tax rate (12.5%)
Strong sectors: tech, pharma, financial services
Attracts FDI, improving capital, tech transfer, productivity
What is the state of poverty in Ireland?
20.8% of population in relative poverty (2023)
9.2% in absolute poverty
High child poverty (19.9%)
Rural areas have higher poverty rates
What are the key factors driving FDI in Ireland?
Corporate tax rate (12.5%)
Skilled workforce and EU market access
US companies make up over 70% of FDI
Brings high-wage jobs, innovation, and tax revenue
What is the level and focus of public expenditure in Ireland?
Public spending: 25.4% of GDP (2023)
Priorities: healthcare, education, social protection
Budget surpluses allow higher spending without borrowing
Lack of NHS-like services
What is the state of Ireland’s debt and its causes?
Government debt: €220.7 billion (43.3% of GDP, end of 2023)
Causes: COVID-19 spending, social benefits, infrastructure needs
Strong tax revenues from multinational corporations
