ESRI Warns Ireland’s Post-Brexit Growth Faces Workforce and Tax Risks

Dublin: Ireland’s economy has recorded strong growth in the years following Brexit and the Covid-19 pandemic but remains vulnerable to significant labour-market and fiscal risks, according to the latest economic outlook from the Economic and Social Research Institute (ESRI).

The report warns that proposals by US President Donald Trump to encourage pharmaceutical companies to relocate production back to the United States could have serious consequences for Ireland. If implemented, such measures could result in a reduction of at least 10% in Ireland’s workforce in affected sectors, while gross national income (GNI) could fall by around 1.5%.

The ESRI notes that Ireland has become increasingly dependent on export-oriented multinational companies for employment and corporate tax revenues, a reliance that represents a key source of economic vulnerability. US trade policy and wider geopolitical uncertainty are identified as major external risks, although the report states that, in the absence of major shocks, the economy is expected to continue growing.

According to the outlook, GNI is projected to grow by an average of 2.3% annually to 2030, easing slightly to 2.1% per year to 2035. However, the ESRI cautions that labour-market risks could materialise in specific sectors in the near term. Any relocation of production or operations by large US-based pharmaceutical or technology firms would directly affect high-skilled employment in Ireland, potentially leading to job losses in manufacturing and services and a slowdown in domestic consumption.

The report also highlights risks linked to Ireland’s dependence on corporate tax receipts. A decline in tax revenues from multinational firms could constrain government spending on public services, infrastructure and housing. Even modest reductions in revenue, the ESRI warns, could delay long-term investments in areas such as health and education.

To mitigate these risks, the ESRI calls for stronger support for domestic entrepreneurship and small and medium-sized enterprises. Reducing reliance on exports and multinational firms, and shifting towards a growth model more firmly anchored in domestic demand, would help Ireland better withstand global economic uncertainty and provide greater long-term stability, the report concludes.

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