Bernard Durkan (Kildare North, Fine Gael)
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255. To ask the Minister for Finance the degree to which he remains satisfied that Ireland’s economy remains adequately competitive; and if he will make a statement on the matter. [3317/23]

Bernard Durkan (Kildare North, Fine Gael)
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263. To ask the Minister for Finance the degree to which foreign direct investment remains an attractive, option given the need to ensure Ireland continues to benefit; and if he will make a statement on the matter. [3325/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 255 and 263 together.

Ireland has a long-standing reputation internationally as a stable and pro-enterprise economy, reflected in our continued ability to attract and retain foreign direct investment (FDI). I am conscious of the need to maintain our competitive position on an international stage, given the contribution of this FDI to the domestic economy.

Latest data shows that the stock of FDI in Ireland stands at almost €1.4 trillion. Furthermore, the IDA reported the highest ever increase in FDI-related employment last year, with a 9 per cent increase in employment on 2021. The numbers employed in the multinational sector in Ireland last year are estimated at over 300,000 according to the IDA, with even more jobs in indigenous SMEs supported indirectly by the presence of this investment. Multinational enterprises also contribute to the economy by way of income and corporation tax receipts.

However, the world is facing into another year of considerable uncertainty. As a small, open economy, Ireland is particularly exposed to risks in the global economy, including further shocks to energy supplies and heightened geopolitical tensions.

Given that many of these factors are out of our control, it is important to focus on what we can control to ensure that Ireland retains our competitive advantage. This includes strengthening our strong legal and regulatory landscape, promoting our reputation as a stable economy in which to start and scale up a business, while continuing to invest in our talented and flexible workforce. Indeed, recently introduced measures in Budget 2023 aimed at incentivising employment via income tax cuts and increased childcare subsidies will have added to Ireland’s reputation for attracting and retaining talent.

In the year ahead, this Government will continue to support FDI, investing in key infrastructure and skills, as continued investment will be critical in supporting the domestic economy through the current global crisis.

Bernard Durkan (Kildare North, Fine Gael)
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256. To ask the Minister for Finance the extent to which any particular economic features require amendment or refocus in order to avoid difficulties in the future; and if he will make a statement on the matter. [3318/23]

Michael McGrath (Cork South Central, Fianna Fail)
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As a small open and highly globalised economy, we are, by our very nature particularly susceptible to economic shocks and periods of volatility. In the last half decade alone, our economy has endured several once in a generation type shocks. Firstly, we had to contend with the long drawn-out effects of Brexit, this was followed by a global pandemic which brought large parts of our economy to a standstill for nearly two years. Now our economy must contend with the economic aftershocks of war on European soil.

The exceptionally large energy price shock, resulting from Russia’s invasion of Ukraine, has reverberated throughout the world and led to multi-decade high global inflationary pressure. In Ireland, the annual average inflation rate rose to just over 8 per cent in 2022, compared with around ½ per cent over the past decade. Almost every advanced economy is in the same position, with euro area inflation averaging 8.4 per cent last year.

Whilst we cannot prevent shocks of this nature from occurring, we can ensure we are on the best possible footing to respond to these shocks when they do occur. This prudent approach has enabled the Government to respond pro-actively to help protect households and business as cost of living pressures have mounted. Budget 2023 was a cost of living budgetand provided for a total package of €11 billion in measures, comprising €4.1 billion of temporary supports, such as electricity credits, double transfer payments and TBESS as well as €6.9 billion of permanent measures including adjustments to income tax bands, increases in social welfare and pension rates and reduced childcare costs. These supports have been designed to provide much needed support to households and firms while avoiding a situation in which the Government’s response becomes part of the inflation problem.

Despite numerous shocks over recent years, our economy proven to be remarkably resilient in the face of these challenges. Nowhere has this resilience been more clearly evident than in the labour market, with 2½ million people now in employment – a record level and an unemployment rate of just 4.3 per cent in December, one of the lowest rates on record.