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Ireland's Disappearing Fiscal Space 2016 - 2019

Disappearing Fiscal Space


Inversions – Long Term

Corporate inversion is a term for the relocation of a corporation's legal domicile to a country with a lower rate of corporation tax. Continued measures by the US treasury to stem the flow of inversions will adversely affect the Irish Economy’s Fiscal Space. The impact will be felt as a gradual process over the next decade.

Immigration –  Short Term

Immigration will impact on the Irish economy both directly and indirectly.

- Directly as immigrants are integrated into our economy - initial welfare payments and social housing provided will far outweigh tax contributions from migrants.

- Indirectly as the fiscal space of other EU countries contracts due to initial costs of immigrant integration.  The initial slowdown will have a short term effect on Irish exports.

China’s Economic Slowdown – Short Term

The recession in China will also have an indirect effect on our exports as it will impact all countries who supply them with goods and services. Disappearing Fiscal Space will lead to Disappearing Public Sector Projects.

Brexit - Short and Long Term

In the short run, sterling is assumed to depreciate further against the euro in a deal scenario, and further still with a no-deal. In the long term, both types of scenarios lead to higher import prices for consumers and a loss in competitiveness of Irish exports.  Overall, in the long term Brexit will stunt growth in the Irish economy.

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