Ireland has risked its position as a magnet for foreign investment by failing to deliver urgent infrastructure and business reforms as the country braces for transatlantic trade turbulence, experts and executives have warned.
The small country, which once declared itself “spiritually” closer to Boston despite being geographically nearer to Berlin, has grown rich from decades of investment by American tech and pharma companies and has the world’s largest trade surplus with the US per head.
That makes it vulnerable to US President Donald Trump’s tax and tariffs threats. But even without those, Ireland must do more to remain attractive to outside investors and develop innovation at home.
“It’s the frog in the pot problem,” said Mike Beary, chair of University College Dublin’s governing authority and former head of Amazon Web Services in Ireland. “We won’t know we’re screwed until the moment has passed . . . We need to stop being complacent.”
Ireland is swimming in cash. US tech giants such as Apple, Microsoft, Google and Meta, and pharma groups like Pfizer and Eli Lilly, which have major operations or EU headquarters in the country, have driven record corporate tax receipts and eye-popping government surpluses.
But executives and lawyers have blasted Ireland’s “hostile” planning process, which has delayed energy and other infrastructure projects. Ireland also has an acute housing shortage that even officials warn risks hurting competitiveness.
Ireland must “do everything possible to solve the issues that are going to impede more foreign direct investment,” said Martin Shanahan, former chief executive of IDA, the state agency responsible for attracting foreign direct investment (FDI). “We have no control over the US president or his administration . . . So [Ireland must] concentrate on the things we can do ourselves.”
“Addressing these infrastructural issues will require political will,” added Shanahan, now a partner at Grant Thornton.
Ireland’s failure to deliver has come back to bite it before. In 2018, frustrated by delays in Ireland’s cumbersome planning process, Apple scrapped plans for an €850mn data centre in the western town of Athenry.
That “should have been Ireland’s ‘wake-up’ moment,” Beary said. Yet Ireland has continued to miss out on investment.
Data centres, an industry Ireland pioneered, have been pushed elsewhere by energy supply problems, while plans from Google and Equinix have hit the rocks.
Ireland’s government passed a major planning reform last year to speed up infrastructure, including offshore wind, but it is not expected to take effect fully for months — or to prove a panacea.
Since Athenry, Ireland’s dependence on US investment has deepened. Last year, it secured a record €1.9bn in research, development and innovation FDI, largely from US companies whose taxes helped deliver a €13bn budget surplus.
IDA is confident of winning €7bn in research and development investment by 2029, with a new focus on AI — a goal chief executive Michael Lohan says is “absolutely achievable” despite Trump’s drive for US companies to invest at home.
But risks are multiplying. Trump has already pulled the US out of a global tax deal and has threatened foreign nationals and companies in the US with punitive taxes to hit back at “discriminatory” levies on American multinationals.
He has also vowed to slap 25 per cent tariffs on all EU exports and has floated targeting pharmaceutical exports with unspecified measures. Pharma exports make up 61 per cent of Ireland’s €73bn exports to the US. Ireland produces major drugs like Eli Lilly’s anti-obesity treatment Zepbound, Pfizer’s Viagra and Allergan’s Botox.
Trump has pushed ahead with tariffs against China, but uncertainty over his plans for the EU could slow investment.
IDA chair Feargal O’Rourke acknowledged potentially “tumultuous” times ahead — though he insisted Ireland was facing them “from a position of considerable strength”. Lohan said the IDA was planning to appeal to major manufacturers by offering so-called “large scale, utility ready sites”.
But the government needs to do more, said Aoife Lavan, president of the Irish Tax Institute. She called for reforms including cutting red tape and overhauling tax policy for small businesses that “has hindered the pro-enterprise policies of successive governments”.
“A clear, simple and easy to comply with tax system would be a major competitive advantage for Ireland,” she added. “Progress has been made, but the pace of reform has been frustratingly slow.”
Entrepreneurs welcomed new “angel investor relief” tax breaks for investment in early stage innovative companies. Enterprise Ireland, the state agency tasked with helping homegrown companies grow, said it was focused on boosting capital to early stage companies especially in high-tech sectors including AI, advanced manufacturing, healthcare.
But John Collison, co-founder of Ireland’s biggest tech success story, Stripe, lamented his home country’s “seeming inability to solve obvious infrastructural problems”, like capacity constraints at Dublin airport.
“We have the money and capability to fix our infrastructure constraints,” said Beary. “We just have to be bold.”
Ireland boasts an economic history “defined by bold, decisive bets,” said Patrick Walsh, head of Dogpatch Labs, Ireland’s leading start-up hub.
He pointed to Ireland’s investment of 20 per cent of its budget in a pivotal hydroelectric project a century ago when the government was nearly bankrupt, a game-changing plan to open the economy to foreign investment in 1958 and the creation of a financial services hub in the late 1980s when rampant unemployment was again driving Irish people abroad.
In 2011, in the midst of an EU and IMF bailout, the government touted Ireland as the world’s best small country to do business. “Now the pitch should be the easiest place to innovate,” Walsh said.
“We have every reason to believe we can do it,” he added. “The only question is whether we seize the moment — or let it slip away.”