major macro economic indicators
|GDP growth (%)||25.6||5.1||4.9||3.9|
|Inflation (yearly average, %)||0.0||0.2||0.3||0.7|
|Budget balance (% GDP)||-1.9||-0.7||-0.4||-0.2|
|Current account balance (% GDP)||10.9||3.3||2.9||2.5|
|Public debt (% GDP)||76.9||72.8||69.9||69.1|
- Flexible labour and goods markets
- Favourable business climate, attractive tax regime
- Presence of multinationals, in particular from the USA, providing a quarter of jobs, 15% of wages and 60% of non-finance market activity
- Presence (through multinationals) in high added value sectors (including pharmaceuticals, computing, medical equipment)
- Level of dependence on multinationals in terms of GDP, jobs and foreign trade: offshore activities, mainly in the form of contracted out foreign fabrication, account for ¼ of GDP
- Dependence on the economic situation and tax regimes in USA and Europe, in particular the United Kingdom
- Vulnerability to changes in the strategies of foreign companies
- Continuing high levels of public and private debt
- Banking sector remains vulnerable to shocks
- Uncertainties on Brexit terms and future relations with the United Kingdom, specifically Northern Ireland
Consolidation of growth in 2018
Irish economic activity is expected to remain dynamic in 2018, despite a slight slowing. The purely domestic market should gradually pick up the slack from the activity of the multinational firms that have domiciled some of their operations in Ireland in order to benefit from low corporate tax rates (maximum of 12.5%). Growth could, however, suffer as a result of the uncertainties arising from the United Kingdom’s exit from the European Union. Domestic demand will remain the main driving force for the economy.
Household consumption, which grew at a slower rate than had been expected in 2017, will be bolstered by wage growth and increasing employment. Inflation, which was up slightly in 2017, continues to be kept low by falling prices for goods imported from the UK. This will rise gradually through 2018, driven by rising housing prices and the increase in the cost of labour. Investment, which made a significant contribution to activity in 2017, will continue to benefit from the solid health of the construction sector. The catch-up effect that began in 2016 will continue into 2018, with the rise in disposable household incomes helping to consolidate the demand for housing. Following weak growth in 2017, manufacturing investment is expected to stand still, while R&D investment will remain dependent on activity levels of multinational companies. The high levels of company indebtedness and non-performing loans still on the banks’ balance sheets (15% of their portfolio, concentrated in mortgages and loans to the SME sector) will continue to impact on credit, for SMEs in particular. In terms of supply, the weak performances in the manufacturing sector will continue to be offset by the strength of activity in the services sector – most notably information technology and communications.
Near budgetary equilibrium and current account surplus
In 2017, the boost to service exports was largely counterbalanced by the slowdown in goods exports. The first impact of Brexit on the external accounts was in the form of an increase in imports under the combined impetus of strong domestic demand and the depreciation of the British pound. The current account surplus recorded in 2017 is expected to continue in 2018, but recent movements in exchange rates are likely to affect the competitiveness of Irish goods exports. However, the slowing in shipments to the United Kingdom will be made up for by higher levels of demand from its other trading partners, such as the European Union and the United States where demand remains strong.
The contraction in the public deficit is expected to continue in 2018 despite the expansionist budgetary policy. The favourable economic situation which will help boost budget revenues and the raising of certain taxes (commercial properties and sugar) will offset the slight reduction in income taxes and higher public spending. This increased spending will be focused on education and housing, with a specific allocation of EUR 1.83 Bn for the construction of social housing. The structural surplus will drop to 0.5% of GDP in 2018, in line with European recommendations. The public debt will continue to shrink but will remain large.
At the heart of Brexit negotiations
Following the long awaited resignation of Enda Kenny, the leader of Fine Gael, on the 17th May 2017, the Minister for Social Protection, Leo Varadkar, was elected to take over as leader of the party and as Prime Minister. His minority coalition government remains precarious. It includes members of his party and Independents. It relies essentially on an agreement with the second-largest party in Parliament, Fianna Fail, which has agreed to abstain on votes until the end of 2018. In December 2017, a scandal involving Deputy Prime Minister Frances Fitzgerald almost brought down the coalition. It survived with Ms Fitzgerald’s resignation, thereby avoiding the collapse of the government and fresh elections just as the Brexit negotiations are taking place. Early elections (normally due to be held in 2021) cannot be ruled out in 2018, but would probably again result in a fragmented parliament.
The border with Northern Ireland, one of the two land borders between the EU and the UK, has become a critical element in the Brexit negotiations and has highlighted the tensions between the UK, the EU and Ireland. If the United Kingdom left the common market and the customs’ union, this would imply the reinstatement of border controls. Beyond the economic implications of such an eventuality, with more than 30% of exports from Northern Ireland going to Ireland and 30,000 people crossing the border every day, the Irish question potentially imperils the 1998 peace agreement that brought to an end 30 years of civil war. Supported by the EU, Dublin rejects the reinstatement of a hard border and wants a special status that allows Northern Ireland to remain in the customs union. This puts the United Kingdom in a difficult position. Whilst the Northern Irish Republicans would seem to favour Dublin’s proposed solution, the Unionists (DUP) upon whom the government of Theresa May is dependent, are firmly opposed.
Last update : January 2018
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.
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”).
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).
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 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 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.
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).