Multinational companies headquartered in Ireland are causing a drag on the Irish economy, the European Commission has warned.
“Ireland’s headline figures continue to indicate a slowdown of economic activity, largely due to ongoing volatility in the multinational sector, while the domestic economy remains resilient”, the European Commission said.
“Investment experienced a sharp decline in the first half of 2024, primarily due to a significant export of intellectual property by the multinational sector”.
But stripping out the multinationals as well as aircraft leasing and the trademarking sector, the Irish economy enjoyed “modest growth in the first half of 2024.”
The EU views Ireland’s debt as sustainable for the time being.
The Post-Programme Surveillance Report sets out Ireland’s current economic, financial, and fiscal situation. It has been published regularly since the financial crisis when Ireland received financial assistance.
It was one of a barrage of economic data and reports published by the European Commission this afternoon.
New EU rules have allowed the EU to analyse Ireland’s mid and long term plans under the so-called “new economic governance framework”.
Based on Ireland’s budget plans, the European Commission warns that “cumulative net expenditure growth is projected to be above the respective ceiling.”
The ceiling was set by the government itself.
But it is understood that subsequent spending between now and 2026 could still be in line with EU acceptable projections.
“The main differences between both sets of projections for net expenditure reflect diverging assumptions on the permanent impact beyond 2024 of the ‘cost of living’ package announced in Budget 2025”, the European Commission says.
“Ireland’s net expenditure growth in 2025 is not fully in line with the initial steps towards the implementation of the medium-term fiscal structural plan…Therefore, the Commission invites Ireland to take the necessary measures within the national budgetary process to ensure that fiscal policy in 2025 is in line” after all.