1. Impact of Economic Recovery on Irish Business Fergal O’Brien, Irish Business and Employers Confederation Danish Industries 2 nd April 2008

2. www.ibec.ie Ireland past and present 19902006 GDP €bn36175 GDP per capita €10,35741,205 GDP per capita,79%119% % of EU-15 average Exports €20 bn140 bn Total Debt % of GDP96%25% Total Labour Force1.3 m2.2 m Unemployment12.9%4.4%

3. www.ibec.ie 2 very different stages of economic recovery  1993-2000 : economic growth based on strong export performance –Spare capacity in economy –Ireland very attractive to FDI –Competitiveness strong –Tax reform central  2001-2007: economic growth more reliant on domestic demand –Housing boom –Real incomes growing strongly –Retail sector buoyant –Competitiveness weak

4. www.ibec.ie Phase 1: Export led recovery  Eliminated unemployment  Strong employment growth in manufacturing and traded services  Social partnership meant that Government provided generous tax cuts in return for wage moderation  Reform of labour, corporate and investment taxes boosted activity in all sectors  High-tech sectors flourished – pharma, ICT  Spin-offs for domestic enterprise also significant

5. www.ibec.ie Ireland grasped added Export Opportunity of “Single Market” ….

6. www.ibec.ie Surge in new FDI jobs supported

7. www.ibec.ie Businesses and sectors benefiting most  Surge in FDI activity  Major spin-offs for Irish-owned SMEs –Particularly ICT sector / inputs to larger manufacturing  Strong evidence of clustering –ICT / Pharma / medical devices  Emergence of internationally traded services sector  Professional services sector benefited greatly

8. www.ibec.ie Ireland’s share of world trade now falling

9. www.ibec.ie Phase 2: Surge in domestic demand  Inflationary problems emerged from 2001  Coincided with US recession / ICT difficulties  Growth momentum saved by flood of cheap money  Construction activity accelerated  Retail sector booming  Public capital investment programme significant  Growth in employment in public sector  Demographic factors very significant

10. www.ibec.ie Housing completions

11. www.ibec.ie Personal consumption expenditure

12. www.ibec.ie Ireland Denmark: demographics, 2007.

13. www.ibec.ie Ireland Demark: demographics, 2050.

14. www.ibec.ie Net Migration, 1988-2007.

15. www.ibec.ie Population trends

16. www.ibec.ie Importance of immigration, 2006.

17. www.ibec.ie Current challenges  Housing correction was inevitable but has advantages for many business sectors  Combined with global credit crisis makes transition difficult  Export sector under pressure from euro strength  Unemployment likely to rise to circa 6%  Behavioural impact of immigrants will be key  Restoring competitiveness vital

18. www.ibec.ie Medium-term outlook  Demographic story remains very positive  Internationally traded services sector key growth area  Lots of work still to do to solve infrastructure deficit  National debt of just 25% GDP  Catch-up period over and stronger focus on cost control needed  Future growth model has challenges for regional development