The recent PwC Private Business Attractiveness Index observed a regression in Ireland’s position primarily due to the cost-of-living crisis, which severely affected the country’s macroeconomics status. The country went from being ranked first to sixth in that category.
Previously entreating the seventh spot, Ireland now holds the ninth position amongst 33 large economies across Europe, the Middle East, and Africa, marking a fall from its rank two years ago.
Cost increments in the private commercial sector also contributed to this shift, with Ireland ranked 30th and 29th for electricity and living costs, impacting its overall macroeconomic standing.
PwC partner, Colm O’Callaghan, suggested that the current pressure private businesses are under demands for sustained backing for this key economic sector.
He noted that, apart from dealing with the pandemic, soaring inflation, elevated interest rates, and price escalations have added to the cost struggles of private businesses often operating with limited cash flow.
O’Callaghan welcomed the government’s move of decreasing the interest rate on tax debt suspended since the pandemic to zero and Revenue’s flexible approach towards repayments. However, he asserted that new and innovative long-term solutions may be required to assist businesses in managing or paying off the debt while ensuring continuous growth.
However, the report did show some improvements for Ireland. The country’s start-up ecosystem improved, climbing to sixth place, while its education, skills, and talent ranking also saw advancements, shifting from the 12th to the ninth position.
The country improved its standing to secure the 10th place in terms of “tax and regulatory environment”, a leap from the 11th position it held the previous year. There was also a notable advancement from the 20th rank it occupied in 2021.
[Nicola Quinn from PwC suggests that priorities should be set before the budget to support businesses in difficulty]
Nicola Quinn, a partner at PwC, advocates for an encompassing government strategy for the attraction and retention of private businesses in Ireland. She asserts the need for continued support to aid businesses confront the heightened costs of operating in Ireland.
She also stresses the importance of exploring additional tax benefits to stimulate digital transformation, investment in SMEs, and energy transition.
Nicola welcomed the Government’s initiative to simplify the business tax system in Ireland insisting that the implementation of this must be a priority in the forthcoming budget.