Uncertainty globally and tariffs likely to prompt spending fall in Irish economy

"In August the US and European Union agreed a trade deal, including a so-called 15pc baseline tax on many EU imports to the US. Key Irish exports including from the pharma sector escaped the hit while the EU, along with a number of other US trade partners, opted not to reciprocate in kind, easing fears of a trade war."

"Ireland also escaped what could have been a potential hit from Mr Trump's "Big Beautiful Tax Bill", which it had been feared would boost incentives for US multinationals to shift activities from Ireland to the US, AIB chief economist David McNamara said. However, geopolitical uncertainty remains high and because of that consumer spending and business investment growth in Ireland are still expected to cool. AIB is forecasting Irish modified domestic demand, a key measure that hones in on growth in the so-called "real economy", will be 3.2pc this year, slowing to 2.5pc in 2026 and 2.7pc in 2027."

"With the jobs market still strong, Irish households are expected to save more, while business will delay or cancel investments. That will slow growth from where it might have been, Mr McNamara warned."

US tariff changes announced in April produced less damage to Ireland than initially feared after an August US–EU trade deal set a 15% baseline tax on many EU imports and many partners did not retaliate. Key Irish exports, including pharmaceuticals, escaped major tariff effects. Ireland also avoided significant impact from the US tax reform feared to incentivize reshoring by multinationals. AIB forecasts modified domestic demand of 3.2% this year, slowing to 2.5% in 2026 and 2.7% in 2027. High geopolitical uncertainty is expected to cool consumer spending and delay or cancel business investment, tempering job growth.

Read at Irish Independent