The rankings of the wealthiest nations released by The Economist Magazine this week didn’t feature Ireland, much to the surprise of Irish observers. The explanation given for this perceived anomaly centres around the distortion caused by multinationals on Irish GDP numbers, making it difficult to draw accurate comparisons with other nations. In the past, however, The Economist placed Ireland second on this list, a position that Forbes Magazine concurred with just recently and Global Finance Magazine did the same earlier this year.
While both Forbes and Global Finance Magazine agree that Ireland is among the world’s most affluent nations based on GDP, The Economist’s argument is also valid. Irish GDP data is arguably flawed and doesn’t accurately reflect the actual state of the economy. This discrepancy can influence public policy debates and decisions significantly. Justifications for pay rises have frequently been made through referencing Ireland’s status among the world’s top-income nations. Similarly, these figures are often used in lobbying efforts prior to the budget.
Critics argue that the government’s refusal to increase spending demonstrates a lack of empathy rather than a lack of funds. However, contradictory actions have been taken by the government, preaching austerity but presenting budgets that don’t align with this ideology. Ireland boasts some of the best national finances within the OECD due to a rise in corporate tax revenues since 2014. However, the uncertainty surrounding certain tech sectors, such as Intel, a major employer and taxpayer, underlines Ireland’s precarious fiscal position.
The fact remains that Ireland’s “rich” status largely hinges on a few US multinationals. Any disturbances in the global economy could greatly affect the country. Yet, political figures seem to be ignoring this, behaving as if it’s 2007 all over again.