Bernard Durkan (Kildare North, Fine Gael)
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215. To ask the Minister for Finance the extent to which provision continues to be made to ensure adequate safety measures to safeguard the fundamentals of the economy in the future; and if he will make a statement on the matter. [30443/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Despite the significant headwinds faced over the past year, the fundamentals of Ireland’s economy have proven to be remarkably strong. In the first quarter of the year, modified domestic demand (MDD) grew by 2.7 per cent. The broad based nature of this growth is encouraging, with both consumption and investment contributing to robust growth over the first quarter of the year despite substantial inflationary headwinds. Personal consumption grew by 1.7 per cent on a quarterly basis, reflecting strong labour market conditions, with over 2.6 million people at work and an unemployment rate at historically low levels.

Government supports have played a key role in assisting Irish households as they weathered the impacts of recent economic shocks. By responding swiftly and decisively to the inflationary challenge and providing €12bn in cost of living supports, government has helped mitigate the impact of inflationary pressures on both businesses and households.

Over the medium term, it is anticipated that the Irish economy will face a number of significant challenges with a lower growth outlook expected in the second half of the decade due to the rapid ageing of our labour force. Indeed, by 2030, age-related expenditure alone is expected to be €7-8 billion higher than it was at the start of the decade, while other structural changes including digital and climate transitions will also have implications for the economy and the public finances.

The Government is taking steps to ensure that adequate safety measures are in place to protect the fundamentals of the Irish economy as we face the aforementioned challenges and any other obstacles that may arise. A scoping paper entitled Future Proofing the Public Finances – the Next Steps was recently published by the Department of Finance outlining the merits of establishing a long-term public savings vehicle. Such a savings vehicle would earmark windfall corporation tax receipts for the purpose of helping to meet future budgetary pressures.

Through the National Development Plan, we are putting in place the vital public infrastructure to meet the needs of our society. With this ambitious expansion in capital infrastructure, the Government will boost the productive capacity of our economy and deliver much needed housing investment. This in turn will support long term and sustainable growth in our economy.

Bernard Durkan (Kildare North, Fine Gael)
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216. To ask the Minister for Finance the extent to which he and his Department continue to maintain the competitiveness of the economy in the context of European and international markets; and if he will make a statement on the matter. [30445/23]

Bernard Durkan (Kildare North, Fine Gael)
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220. To ask the Minister for Finance the extent to which he is satisfied this country remains a competitive economy and attractive to indigenous investors and foreign direct investors; and if he will make a statement on the matter. [30449/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 216 and 220 together.

Ireland’s long-standing reputation as a stable and pro-enterprise jurisdiction is reflected in the continued investment in the economy. The most recent figures show the stock of foreign direct investment (FDI) in Ireland stood at over €1.2 trillion at the end of the first quarter of 2023. The multinational sector contributes to the domestic economy through employment as well as income and corporation tax receipts.

It is important, given the impact of FDI on the domestic economy, that Ireland maintains its competitive position internationally. Ireland’s talented and flexible workforce, strong legal and regulatory landscape, and reputation as a stable economy all contribute to our competitiveness in encouraging both indigenous and foreign investment. Continued investment in skills and infrastructure will help Ireland to remain attractive in this regard.

The domestic economy has proven resilient in the face of various headwinds over the past year and prospects for the Irish economy compare favourably with European and international peers. The OECD for example, in its recently published Economic Outlook, is projecting modified domestic demand growth of 1.8 per cent for Ireland this year, compared to GDP growth of 0.9 per cent for the euro area.

The outlook for the international economy appears to be less pessimistic than had been assumed last year, with the OECD and others having revised up growth forecasts for this year. However, projections for GDP growth globally and in Ireland’s main trading partners are weak by historical standards. Furthermore, there is considerable uncertainty surrounding the outlook for both the domestic and international economy and significant risks remain.

The Government is steadfast in its commitment to creating an environment for further FDI through investment in key infrastructure and skills, while maintaining our strong legal and regulatory landscape into the future.