Irish Economy 2014: Ibec forecasts robust growth in tax-related services exports

Irish Economy 2014: Ibec, Ireland’s leading business lobby group, in its latest economic forecast today forecasts “continued robust growth in services exports and a recovery in goods exports.” The strong growth in services mainly reflects tax-avoidance related revenue diversions to Ireland that do not reflect local economic activity.

If the current OECD project on the development of new international tax rules takes effect after 2016, more than €50bn worth of services export or half the total value then will be vapourised – and official Ireland will be shocked by the unexpected news!

Pascal Saint-Amans, the director of the OECD’s tax centre, confirmed in a briefing on April 02, 2014 that “Double Irish Dutch Sandwich” type tax schemes, which involve global revenues of services giants being routed through Ireland and transferred via the Netherlands to Irish offshore companies in Bermuda and the Cayman Islands, will be axed.

Ibec has revised upwards its 2014 GDP growth projection to 2.9%, and said investment in the economy will increase by 21.5% (previous projection 15.5%) and consumer spending will increase by 1.9% (previous projection 1.3%) this year. It predicted another good year for jobs, with approximately 50000 new jobs and unemployment dropping to 10.9% this year, and still further to 9.6% in 2015.

Fergal O’Brien, Ibec head of policy and chief economist, said: “The recovery is gaining momentum, with spectacular employment growth in the private sector and strong increases in consumer confidence, business confidence and investment. Ireland is on the way back. We are now out-performing many of our European competitors. This strong performance means the Minister for Finance will be in a position to reduce income tax in the next budget. The 2013 GDP performance was not a true reflection of the current health of the Irish economy – the economy has been performing much better than reflected by the GDP numbers for some time now. The employment growth trend actually provides a much better measure of what is happening in the real economy at present.”