major macro economic indicators
|2016||2017||2018 (e)||2019 (f)|
|GDP growth (%)||5.0||7.2||7.8||4.5|
|Inflation (yearly average, %)||-0.2||0.3||0.7||1.2|
|Budget balance (% GDP)||-0.5||-0.2||-0.1||-0.1|
|Current account balance (% GDP)||-4.2||8.5||11.6||10.5|
|Public debt (% GDP)||73.4||68.4||63.9||61.1|
(e): Estimate. (f): Forecast.
- Flexible labour and goods markets
- Favourable business environment; attractive taxation
- Presence of multinational companies, particularly from the United States, providing a quarter of jobs, 15% of wages and 60% of non-finance market activity
- Presence through multinationals in high value added sectors, including pharmaceuticals, IT and medical equipment
- Dependent on the economic situation and tax regimes of the United States and Europe, particularly the United Kingdom
- Vulnerable to changes in the strategies of foreign companies
- Public and private debt levels still high
- Banking sector remains vulnerable to shocks
- Uncertainties on the terms of Brexit and future relations with the United Kingdom, especially Northern Ireland
Slower growth in 2019
Growth was very buoyant in 2018. The domestic economy has proven to be robust, supported by strong demand and well oriented exports, particularly in the pharmaceutical sector. The increase in household disposable income, supported by higher employment and low inflation, continued to boost housing demand. Activity is expected to decelerate in 2019, although the extent of the slowdown remains uncertain, and will depend on the outcome of Brexit negotiations between the United Kingdom and the European Union. If the proposed withdrawal agreement is approved, growth could still suffer from a decline in household and business confidence. Highly dependent on the United Kingdom (15% of Irish exports of goods and services are to the UK), exports should also be penalised. Some sectors, such as agri-food, would be particularly vulnerable, even if a customs union is formed. While a no-deal Brexit in March 2019 is unlikely, it cannot be entirely ruled out. Such a scenario would have severe consequences on the Irish economy and could result in a 7 percentage point contraction in GDP by 2030. The ratification of the exit agreement between the United Kingdom and the EU in November 2018 by the British Parliament is therefore crucial for Ireland, as it would not only maintain an open border between Ireland and Northern Ireland, but would also facilitate furthertrade.
Large current account surplus expected to continue
Public finances continue to improve. The favourable economic environment has continued to generate budgetary revenues, in particular through higher-than-expected corporate income tax revenues. The 2019 budget, based on a growth estimate of 4.2%, should allow a balanced budget to be maintained while continuing the investment policy initiated in 2018 under the national development plan. Since some of the resources included in the 2019 budget have already been committed to capital expenditure, the government will have to increase certain taxes (VAT on tourism, cigarette tax) to give itself additional room for manoeuvre. Household taxes are expected to decrease (0.5% of GDP) but by less than in 2018.
Robust export growth and low imports, linked in particular to the decline in chartering activity, saw the trade surplus swell sharply to almost 35% of GDP in 2018, comfortably offsetting the large income deficit arising from the activity of multinational firms. Ireland is expected to continue to enjoy a sizeable current account surplus in 2019. Exports will remain brisk, particularly to the United States and the EU, but are expected to continue to slow towards the United Kingdom. However, a large portion of the surplus remains linked to multinational firms (depreciation of foreign capital on the domestic market and undistributed profits of foreign companies). Stripping out these statistical distortions, the current account surplus would be equivalent to 1.3% in 2018 and 1.0% in 2019.
Brexit agreement in favour of Ireland
While Brexit negotiations seem to have tilted in favour of the Irish Republic, Ireland’s fate remains dependent on the decision of the British Parliament to ratify the November 2018 agreement. If validated, it should protect Ireland from the possible consequences of Brexit beyond the transitional period. The border between Northern Ireland and Ireland should thus remain open, respecting the 1998 Peace Treaty, and the free movement of persons would be maintained until 2020. The text also provides additional guarantees for Ireland (backstop).
Regarding domestic policy, Taoiseach (Prime Minister) Leo Varadkar’s minority government remains fragile. It essentially relies on an agreement with the second-largest force in the parliament, the Fianna Fáil Party, which agreed to abstain from a non-confidence vote in the government. Despite supportive economic conditions, the government is under increasing pressure and continues to be challenged over its management of the housing crisis. Mr Varadkar has pledged to not call an election before the end of the Brexit crisis, but snap elections in 2019 – instead of in 2021 as scheduled – cannot be ruled out. Elections could in fact turn in Mr Varadkar’s favour, since the latest polls show that his Fine Gael Party would win a comfortable victory. With the support of independents and the Green Party, he could rebuild a majority without a prior agreement with Fianna Fáil. Last but not least, outgoing president Michael D. Higgins was re-elected by a large majority on October 26.
Last update : February 2019
Cheques are generally used for both domestic and international commercial transactions. However, for international transactions, the use of bills of exchange is preferred, together with letters of credit. Bank transfers are common, with SWIFT transfers being utilised regularly. Direct Debits and standing orders are also becoming more recognised as an effective payment method, and are particularly useful for domestic transactions. Assignment of invoice is accepted both pre- and post-supply of goods and/or services.
Where there is no specific interest clause, the rate applicable to commercial contracts concluded after August 7, 2002 (Regulation number 388 of 2002) is the benchmark rate (the European Central Bank’s refinancing rate, in force before January 1 or July 1 of the relevant year) marked up by seven percentage points and applied to the contracts via a percentage calculated per day past due date. For claims exceeding €1,270, debtors may be threatened with a “statutory demand” for the winding-up (closure) of their business if they fail to make payment or come to acceptable terms within three weeks after they receive a statutory demand for payment (a “21-day notice”).
The debt collection process usually begins with the debtor being sent a demand for payment, followed by a series of further written correspondence, telephone calls, personal visits, and debtor meetings. If the two parties are unable to reach an amicable settlement, the creditor may begin legal proceedings.
If a defendant fails to respond within the allotted time to a court summons (either a plenary or summary summons before the High Court, a civil bill before the Circuit Court, or a civil summons before the District Court), the creditor may obtain a judgement by default based on the submission of an affidavit of debt without a court hearing. An affidavit of debt is a sworn statement that substantiates the outstanding amount and cause of the claim. It bears a signature attested by a notary or an Irish consular office. The claim amount at stake will determine the competent court: the District Court, then the Circuit Court, and, for claims exceeding €38,092.14, the High Court in Dublin, which has unlimited jurisdiction to hear civil and criminal cases and to assess, in the first instance, the constitutionality of laws enacted by Parliament (Oireachtais).
In any of the three courts, if the debt is certain and undisputed, it is alternatively possible to request a fast-track summary judgment from the competent court.
District Court: amounts up to €6,348
For contested debts, a civil summons is served on the debtor, with the originating court proceedings setting out the claim and amount alleged owed. The debtor then files a Notice of Intention to Defend, indicating that he intends to contest the case, at which point the court fixes a hearing date. The case is heard before a judge, who decides whether to issue an order for judgment (a Decree).
Circuit Court: amounts from €6,349 to €38,092
In this case, a civil bill is served on the debtor, who, in turn, will enter an Appearance (a formal document indicating that the debtor intends to answer the claim). A notice for particulars is then also filed by the debtor, in which he seeks further information about the claim to which the creditor sends replies. The debtor must deliver a defence within a prescribed period. The creditor then serves the defendant with a formal notice advising of hearing date. Each side presents its case and the judge makes a decision.
High Court: amounts over €38,093
In front of the High Court, a summary summons is served on the debtor, who then files an Appearance. The creditor makes an application to the Master of the High Court for judgment by way of motion and grounded by sworn affidavit. The debtor can reply to the claim by sworn affidavit. If the Master is satisfied that the debt is due and owing, liberty to enter final judgment is granted. However, if the Master is satisfied that the debtor has a genuine dispute, the case is sent for a plenary hearing. During the plenary hearing, the merits of the case are heard either as oral evidence or affidavit. A High Court hears the case and makes a determination.
The commercial court – a special division of the High Court, created in 2004 – is competent to hear commercial disputes exceeding €1 million, included in a commercial list or cases concerning intellectual property, and is able to provide a suitable and rapid examination of the cases submitted. At the discretion of the commercial judge, proceedings may be adjourned for up to 28 days to enable the parties to refer to alternative dispute resolution practices, such as conciliation or mediation.
Normally, obtaining a decision may take a year. However, this timeframe may be doubled if compulsory enforcement is required. Appeal claims brought before the Supreme Court may take an additional three years.
Enforcement of a legal decision
A judgment is enforceable as soon as it becomes final. If the debtor fails to satisfy the judgment, the creditor can request the competent court to order execution by way of attachment and sale of the debtor’s assets by the Sheriff. There is also the possibility to obtain payment of a debt through a third party owing money to the debtor (garnishee order).
For foreign awards, enforcement depends on whether the decision is issued in an EU member state or a country outside the EU. For the former, Ireland has adopted enforcement mechanisms; such as the EU Payment Order, or the European Enforcement Order when the claim is undisputed.
Informal negotiations may take place, and any agreement must be unanimously adopted by all creditors.
Examinership is an Irish legal process whereby court protection is obtained to assist the survival of a company; The company may then restructure with the High Court’s approval. It provides a maximum 100 day period in which a court appointed official (the examiner) seeks to take control of the company and manage it so that the company may continue to trade. The procedure may be initiated by the company, its directors, or one of its creditors. Once the examiner has been appointed, no proceedings may be commenced against the company. Its functions are to examine the affairs of the company and to formulate proposals for its survival. The examiner must formulate proposals for a compromise or scheme of arrangement to facilitate the survival of the relevant body as a going concern. They can be accepted by the creditors but they must be validated by the court.
The procedure arises in the context of secured creditors and provides a framework in which they may act so as to enforce their security interest. A receiver is appointed to a company by either a debenture holder or the court to take control of the assets of a company, with a view to ensure the repayment of the debt owed to the debenture holder, either through receiving income or realising the value of the charged asset.
The terminal process by which a company is wound up and dissolved, this process is conducted by a liquidator who takes possession of assets and distributes the proceeds from their sale in accordance with the priority of repayment. The liquidator is also required to investigate the conduct of the directors of the company and prepare a report for the Office of the Director of Corporate Enforcement (ODCE). Dependent of its view, the liquidator may also be required to bring restriction proceedings against one or more of the directors. The procedure can be started by a competent court (court liquidation), the creditors (creditors’ voluntary liquidation) or the debtors (members’ voluntary liquidation).