Economic studies
Ireland

Ireland

Population 4.6 million
GDP per capita 61206 US$
A3
Country risk assessment
A1
Business Climate
Change country
Compare countries
You've already selected this country.
0 country selected
Clear all
Add a country
Add a country
Add a country
Add a country
Compare

Synthesis

major macro economic indicators

  2014 2015  2016 (e) 2017 (f)
GDP growth (%) 8.4 26.3 5.2 4.0
Inflation (yearly average) (%) 0.3 0.0 0.0 1.5
Budget balance (% GDP) -3.7 -1.9 -0.9 -0.5
Current account balance (% GDP) 1.7 10.2 9.5 9.7
Public debt (% GDP) 105.4 78.7 77.1 75.0

 

(f) Forecast

STRENGTHS

  • Flexible jobs and goods markets
  • Favourable business climate, attractive tax regime
  • Presence of multinational companies
  • Specialisation in high-added-value sectors (including pharmaceutics, IT and computers, medical equipment)

WEAKNESSES

  • Dependence on the European economic situation, and UK in particular
  • Vulnerability to changes in foreign company strategies
  • Continuing high level of public and private debt
  • Banking sector remains vulnerable to shocks

Risk assessment 

Growth remains strong but uncertain medium-term economic outlook

Growth, which was artificially swollen in 2015, because of the repatriation of financial assets by some multinationals and the arrival of an aircraft leasing company (real GDP increase was approximately 4.5% excluding these exceptional factors), continued in the right direction in 2016. Multinational companies domicile their operations in the country to take advantage of the low corporation tax rate (12.5% at the most) but any positive effects of their activities are limited as most of these activities take place outside Ireland. The domestic market however gains momentum and there is some additional job creation. Unemployment has fallen and wages are rising,  which should help drive consumption in 2017, whilst investments are likely to slow unless there are some new initiatives from multinational companies (in particular patent transfers). House building is however expected to continue. The high level of corporate debt and non-performing loans (mortgages, SME loans) still held by banks will continue to impact on credit availability to smaller companies. Stress tests carried out in 2016 by the European Banking Authority also revealed that Irish banks were still overly vulnerable to economic shocks.

In terms of foreign trade, the depreciation of the pound sterling, under the Brexit effect, could continue to impact on the Irish home economy, and in particular the agri-business sector, whilst multinationals, whose sales are denominated in other currencies, are relatively immune. Exports should however feel the benefits of a gradual increase in demand in other export markets.

There are other medium term challenges. If the United States reduces taxes on business, US multinationals could decide to repatriate some of their business operations and some of their profits to their country of origin. On the other hand, the withdrawal of the United Kingdom from the EU could lead to British companies relocating to Ireland.

Inflation is likely to rise in 2017 alongside the gradual rise in energy prices and possible tensions in the job market.

 

Continuing surplus in external accounts and a public debt that is gradually being reduced

Ireland’s current account returned to surplus in 2013 thanks to a contraction in domestic demand and an improvement in its cost-competitiveness (the unit cost of labour rose slightly in 2016 but remains well below the levels seen prior to 2015). The current account surplus remains substantial. Exports growth rate  slowed in 2016 because of weaker demand for chemical and pharmaceutical products (#1 exports) and a reduction in domiciliation by foreign companies. Slowing demand in the United Kingdom (15% of Irish exports) was however offset by strong growth in exports to China and the United States, and this trend is likely to continue in 2017.

The country  ended,  in late 2013, its international rescue plan without having to call on the Precautionary Credit Line. Thanks to economic growth and  budget cuts, public deficit has been significantly reduced and national debt, which had literally ballooned between 2008 and 2012 as a result of the banking sector bailout and the recession, is gradually being reduced. In this context, the government now has increased room for manoeuvre which should enable it to cut taxes on lower income families and restart public investment. The increasing importance of corporation tax for government revenues means that the public accounts are more vulnerable to any changes in the strategies of multinational companies.

 

A fragmented political landscape

The inconclusive result of the February 2016 parliamentary elections delayed the formation of a new government. Parliament finally approved the appointment of Enda Kenny, leader of Fine Gael, as Prime Minister. He has been leading a minority coalition government since May 2016 that includes members of his party and a diverse mix of independent members of parliament. The second biggest party in parliament, Fianna Fail, the long-term rival to Fine Gael, agreed to abstain in parliamentary votes until the end of 2018. Any election ahead of the scheduled elections due to be held in 2021, would probably lead, once again, to a hung parliament.

 

 

Last update : January 2017

 

Payment

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. These are often seen as a quick and efficient method of payment.

 

Direct Debits and standing orders are also becoming more recognised as an effective method of making payment for regular and expected financial transactions, and are particularly useful for domestic transactions.

 

Assignment of invoice is accepted both pre-and post-supply of goods and/or services.

Debt collection

Amicable phase

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, and personal visits, and debtor meetings. If the two parties are unable to reach an amicable settlement, the creditor may begin legal proceedings.

 

Where there is no specific interest clause, the rate applicable to commercial contracts concluded after the 7th August 2002 (Regulation number 388 of 2002) is the benchmark rate, i.e. the European Central Bank’s refinancing rate, in force before 1st January or 1st July 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 EUR 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”).

 

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 EUR 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).

 

Fast-track procedure

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 EUR 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 EUR 6,349 EUR to EUR 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 EUR 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.

 

In 2004, a commercial court – a special division of the High Court – was created. The commercial court is competent to hear commercial disputes exceeding EUR 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 court 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 a European Union (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.

 

Insolvency proceedings

Out-of-court proceedings

Informal negotiations may take place, and any agreement must be unanimously adopted by all creditors.

 

Examinership

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.

 

Receivership

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.

 

Liquidation

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).

Top
  • Bulgarian
  • English