US trade tariffs have exposed again the frailty of our economic model and the outsized impact of a small number of large multinational companies on Ireland’s economic future.
Already this year, it has been estimated that between 30 and 40 per cent of investments have been delayed.
With the increasing geopolitical and economic volatility globally, there is an urgent need to rebalance our economy and ensure that ambitious Irish owner-manager and indigenous businesses can become drivers of overall economic growth.
Now is the time for bold decisions that can reset the course of our economy.
That starts with recognising the critical role that family-run businesses, high-potential start-ups, and small to mid-sized firms already play. Together, they employ two-thirds of Ireland’s workforce and are the beating heart of local economies across the country.
Supporting these businesses to scale up means tackling the range of persistent challenges they face – including high operating costs, challenges in deploying automation and AI, limited access to capital, and difficulty attracting skilled talent. Doing so can unlock their full potential and strengthen Ireland’s ability to withstand future economic shocks.
While discussions about US tariffs dominate, the reality is that these measures may only have a direct adverse impact on a limited number of larger companies.
Meanwhile, thousands of SMEs – the true backbone of the Irish economy – continue to grapple with day-to-day pressures and rising costs.
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The Government has poured cold water on suggestions it would take direct action to alleviate some of these immediate pressures, notwithstanding the recent record corporation tax take. A comprehensive plan is now needed to enhance the growth potential of ambitious owner-manager businesses.
The 15-point competitiveness plan brought to Cabinet recently by Minister for Enterprise Peter Burke is an important step forward that could provide an initial blueprint for enhancing competitiveness and productivity within the domestic economy.
Moving to action is now crucial.
A prime example is the Government’s recent decision to delay the reduction in VAT for the hospitality sector until January 2026. If the reduction is the right thing to do, delaying its introduction only prolongs the challenges faced by hotels, restaurants and cafes.
In sectors such as hospitality, for example, further delays could contribute to the loss of another 500 restaurants or cafes before relief arrives. Some may have to turn to the Small Company Administrative Rescue Process (Scarp) to recover, while others will be overwhelmed and go into liquidation.
As global volatility becomes the new normal, it’s now time that Ireland puts indigenous businesses at the heart of its economic future.
The time to act is now. Our future prosperity depends on the Government seizing the opportunities ahead and implementing bold, forward-thinking policies
With the new Government developing enterprise strategy for the next decade, we must prioritise reforms and policy measures that support indigenous businesses. By doing so we can foster a more resilient and sustainable economy that can withstand international instability and disruption.
Irish SMEs looking to scale up have long struggled to do so due to limited access to capital. The new enterprise strategy could unlock the barriers that are in place. One way to do so would be to use a small portion of pension fund savings to invest in indigenous firms.
Firms that are able to overcome these barriers face real structural challenges in scaling globally. A key obstacle is the taxation burden.
Laying out a roadmap to reducing the rate of Capital Gains Tax to 20 per cent for Irish start-ups and scaling companies would ensure that indigenous firms scale up from this island and compete globally from here.
A more balanced approach to taxation – one that incentivises risk-taking, innovation, and job creation within the real economy – should be a top priority.
Many indigenous firms struggle to attract and retain skilled talent, particularly in sectors where multinationals offer significantly higher salaries and benefits.
The latest Azets Barometer found that talent recruitment is the number two most pressing business challenge today.
Government could introduce targeted measures such as enhanced tax credits for employee share options and building a stronger supply of skilled domestic talent.
Developing an enterprise strategy that reflects the real economy and supports the needs of the vast majority of businesses within it is needed now more than ever.
Ireland is at an economic crossroads. While foreign direct investment has played a vital role in our success story, we must now take decisive steps to pivot Ireland’s economy and focus on unleashing the potential of indigenous businesses.
There is no better opportunity to reshape our economic model and create a more resilient and sustainable economy, powered by thriving domestic enterprise.
The time to act is now. Our future prosperity depends on the Government seizing the opportunities ahead and implementing bold, forward-thinking policies as part of the upcoming enterprise strategy.
The choices we make today will shape Ireland’s economic landscape for decades to come. We must get them right.
Neil Hughes is chief executive of Azets Ireland
