Wednesday 21 November 2018

Friends First warn on corporation tax reliance

Jim Power
Jim Power

Colm Kelpie & Ellie Donnelly

Friends First chief economist Jim Power has warned that policy makers must place more emphasis on supporting the home-grown economy in order to reduce reliance on volatile corporation tax receipts.

In its latest economic assessment, the insurer said global corporation tax developments, fuelled by pressure from other EU member states, as well as US President Donald Trump's increasingly protectionist policies, present the potential to pressurise Ireland's FDI model over the coming years.

The economic assessment out today from the insurers notes that momentum in the Irish economy is strong and prospects for the coming year are promising as the global economy improves.

Mr Power anticipates that real GDP in Ireland could expand by 4pc in 2018, slightly ahead of the Government GDP forecast of 3.5pc.

However Friends First warn that uncertainty around Brexit as well as global corporate tax developments present potential challenges to the Irish economy in the coming year.

"It is clear that Ireland continues to enjoy broadly based growth. The global economic background is looking increasingly better and most domestic indicators are positive. For a small open economy like Ireland, the stronger global backdrop is very important and the world economy seems to be in the sweetest growth spot for a decade," Mr Power said.

It is expected that consumer spending in the coming year will be supported by employment growth of 2.9pc, while average wages are expected to grow by around 4pc. Overall the report predicts that personal disposable incomes will increase by around 6pc.

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