major macro economic indicators
|2017||2018||2019 (e)||2020 (f)|
|GDP growth (%)||8.1||8.2||5.6||-8.3|
|Inflation (yearly average, %)||0.3||0.7||0.8||1.0|
|Budget balance (% GDP)||-0.3||-0.1||0.2||0.0|
|Current account balance (% GDP)||0.5||10.6||0.8||1.1|
|Public debt (% GDP)||67.8||63.6||59.0||54.5|
(e): Estimate. (f): Forecast.
- Flexible labour and goods markets
- Favourable business environment; attractive taxation
- Presence of multinational companies, particularly from the United States, which account for 22% of employment and 63% of value added in the non-financial market sector
- 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 still vulnerable to shocks
- Uncertainties about future relations with the United Kingdom
Further slowdown in growth in 2020
Growth will continue to slow in 2020, but will remain strong, thanks to household consumption, which will continue to be brisk, driven by a very low unemployment rate (4.8% in October 2019) and significant real wage increases. In addition, with extremely favourable financing conditions continuing to support housing demand, residential investment will remain robust. Conversely, after an exceptional 2019, investment in research and development (R&D) by multinationals will make a much less positive contribution to growth. At the same time, investment in equipment is likely to be curbed by an adverse international environment, including uncertainties about the future relationship with the United Kingdom, global trade tensions and a US slowdown. However, after weighing heavily on growth in 2019, due to substantial imports of R&D services (as a result of investment), foreign trade should make a positive contribution in 2020. On the one hand, imports are going to decelerate sharply, in line with investment, while on the other, exports should remain resilient, thanks to the pharmaceutical sector (32% of exports in 2018, 52% including organic chemicals), which is not very sensitive to the global economy. However, the size of the slowdown will depend on the outcome of the negotiations between the United Kingdom and the European Union. If the British Parliament ratifies the withdrawal agreement, trade conditions would remain unchanged during the transition period until December 31, 2020, as the United Kingdom would still be part of the customs union and the single market, although growth could still be dented by a decline in household and business confidence. In addition, uncertainty would remain high during the probably long and difficult negotiations on the future trade relationship with the United Kingdom, which accounts for 14% of Irish exports of goods and services. Some sectors such as agri-food (in particular meat and dairy products) are particularly dependent on the UK and would be severely affected if trade barriers were imposed.
Fiscal policy still prudent
Ireland’s public accounts are expected to remain balanced in 2020, despite a relatively expansionary 2020 budget, including spending increases for education (+€1.9 billion or 0.5% of GDP), social housing (€1.1 billion), health (€1 billion) and social assistance (€690 million). At the same time, budgetary revenues will continue to be driven mainly by strong economic growth, which is fuelling corporate taxes in particular. Unlike in previous years, there will be no changes to income tax brackets, as the government is pursuing a prudent fiscal policy to be ready for the possibility of a disorderly Brexit. Public debt, which stood at 120% of GDP in 2013, will therefore continue its significant downward trajectory (although this partly reflects GDP growth of 26% in 2015, attributable to asset relocations by multinational firms).
The current account, which is highly volatile, is largely dependent on the activity of multinational companies and in particular on their investment decisions. While the goods balance consistently shows a substantial surplus (35% of GDP in 2018), the services deficit seesaws depending on R&D services imports (20% of GDP in the first half of 2019, against 2% of GDP in 2018). In addition, the repatriation of dividends by multinational companies leads to a large and chronic income deficit (22% of GDP in 2018). Thanks to its extremely advantageous tax regime, the country receives considerable foreign investments (direct and portfolio). However, the amount of these investments will once again depend on the unpredictable strategies of multinationals, set against 2020’s uncertain international environment.
Heading for snap elections in early 2020?
At the beginning of January 2020, the British Parliament, now largely Conservative, was about to vote on the United Kingdom’s agreement to withdraw from the EU. Under the terms of this agreement, the need to erect a physical border between Northern Ireland and Ireland at the end of the transition period will be avoided by levying customs duties in the Irish Sea (according to the final destination of the product), thus respecting the 1998 Peace Treaty.
In terms of domestic policy, the minority government of the Taoiseach (Prime Minister), Leo Varadkar, is expected to go back to the polls in early elections (in principle elections are scheduled for April 2021). His right-wing Fine Gael (FG) party won only 54 seats (including 6 allies) out of 158 in the 2016 elections, so Mr Varadkar depends on the support of the second largest force in Parliament, the centre-right Fianna Fáil (FF) party (43 seats), which agreed not to oppose the government until the end of 2019 to guarantee political stability during the Brexit negotiations. At the beginning of January 2020, both parties were in favour of holding elections in the first half of the year. According to polling in late November 2019, elections would yield an unchanged situation, with FG in the lead (30% of the votes), but still dependent on an agreement with FF (24%). The biggest increase would be for the Green Party (7%, up from 3% in 2016), which would be in a position to influence a future coalition.
Last update : February 2020
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).