Ireland’s economic growth ‘vulnerable’ as global risks threaten corporate tax

Kenneth Fox

Over-reliance on corporate tax receipts from US multinationals remains one of the biggest threats to Ireland’s financial stability in 2026, leaving the country in “big trouble if it dries up”, economists have warned.

A sudden shift in the geopolitical scene outside the country could plunge Ireland into recession.

The situation in Venezuela, Donald Trump’s aggressive rhetoric around Greenland, and the combustible internal situation in Iran could all spell trouble for an economy beholden to corporate tax from US companies, they said.

As the Irish Examiner reports, an escalation in the simmering global volatility could pierce Ireland’s ability to maintain its growth, especially with thousands of hard-pressed households already having to absorb rising food, health, and other prices, they added.

Grant Thornton’s chief economist, Andrew Webb described the State’s heavy reliance on corporation tax as “nerve-wracking”.

He said that while most forecasts point to continued growth through 2026, Ireland is “vulnerable” to shocks.

Higher-for-longer interest rates, a turn in the global tech or pharma cycle, or “a wobble” in consumer confidence would all bite harder when households and firms are already under cost pressure, he said.

If even a handful of multinationals change their tax profile, a big chunk of the exchequer’s income can vanish quickly.

"Windfall revenues have boosted Ireland’s coffers, but those receipts are highly concentrated and volatile.”

Institute of International and European Affairs chief economist Dan O’Brien said he was largely confident about the year ahead, but conceded, “Could things go wrong? Of course, they could."

“The idea that you’re just going to grow forever, or at least not ever have a recession again, is just not what economic history tells us.

“There’s the possibility that if the US decides to do something specific towards Ireland or towards the pharmaceutical sector, that will affect Ireland disproportionately.

“There’s absolutely no question the Government has allowed itself to become addicted to corporation tax revenues. That is something that should never have happened.

“These are windfall revenues; that is absolutely clear. They may go on for one to five years for sure, but they won’t last forever, and we’re not going to be an outlier on it forever.”

Ireland should have treated corporation tax the way that Norway treats its fossil-fuel tax intake, Mr O’Brien said, adding it to a bigger sovereign wealth fund, and not being locked in major infrastructure spending commitments.