The end-of-year figures from IDA Ireland show a strong increase in jobs in its client companies this year, rising by 9 per cent to a record level of 301,475. It is an encouraging performance and the agency deserves credit for its continued success. Foreign direct investment has made a major contribution to recent growth in employment, income and taxes. This has provided support for the economy and flexibility to the exchequer through Covid-19 and now the cost-of-living crisis. More than half of all new projects are now going outside Dublin.
Tougher times may lie ahead. The IDA says it has a good pipeline and believes that investment levels will hold up in the first half of next year. However, beyond that it repeats an earlier warning that the outlook is uncertain and more difficult. Mary Buckley, interim chief executive, said that in the light of the headwinds facing the global economy, companies will adopt a cautious approach, with slower growth likely next year and particular uncertainty in the second half of the year.
The IDA has had an extraordinary run since the middle of the last decade in particular. Now geopolitical changes – some resulting from the war in Ukraine – and the cost-of-living crisis are changing the picture, It is hard to predict what these will mean in the years ahead, though the short-term outlook looks challenging, even if some key sectors such as pharmaceuticals remain buoyant.
The technology sector clearly has a strong base in Ireland and will remain a central part of the economy, but is facing into a difficult period. This has implications across the economy. While the IDA figures show strong employment growth on average last year, redundancies are now taking hold.
The sheer scale of the big players means their decisions have a wider impact, too. The move by Facebook’s parent Meta to sublet a significant office space it had planned to occupy itself, and a similar move by LinkedIn in relation to space currently under development, illustrates the impact on the commercial property market and local economies.
The IDA has dealt with periods of downturn or slower growth before; it requires close contact with its client companies and a mindset of protecting what is already here as well as seeking new opportunities. A new strategy under development by the agency will identify its future direction, in line with Government enterprise policy
The Government also has a big role to play. The key issues now for foreign investors, existing and prospective, is the shortage and price of housing for staff, the need for a supply of reliable, green, energy and other infrastructure issues. Unless Ireland is seen to make faster progress here, the job of the IDA in attracting the next wave of investment will be made much more difficult.