Ireland ranks 9th position amongst 33 major EMEA economies as a location for private businesses to thrive.
Ireland ranks among the top 10 among 33 major economies in Europe, Middle East and Africa (EMEA), according to PwC’s latest Private Business Attractiveness Index.
The country has ranked in 9th place as a location for businesses to thrive, up from 14th place two years ago but has fallen two places from 7th position last year.
“Ireland must take a whole of Government approach to attracting and retaining private business. We need to continue to prioritise supports to help these businesses meet the increased costs of doing business in Ireland”
PwC’s index ranks the relative attractiveness of the environment and conditions needed for private businesses to thrive across 33 EMEA countries, based on nine categories including macroeconomics, private business landscape, tax and regulatory environment, sustainability and climate, social responsibility and governance, public health, education, skills and talent, technology infrastructure and startup ecosystem.
Pluses and minuses
The positives driving Ireland’s attractiveness as a place for Private Businesses to thrive include:
- Ireland has improved one position to 6th place for ‘start-up ecosystem’.
- Ireland also improved its ranking to 9th place from 12th last year for ‘education, skills and talent’.
- The country scores 10th place for ‘Tax & Regulatory environment’, up from 11th place last year. However, there was a marked improvement from 20th position in 2021.
However, some worrying trends have outweighed these positives this year:
- Ireland fell in its ranking for ‘macroeconomics’ to 6th position, from first place last year. Much of this significant slip in ranking for the macroeconomic metric, from 1st to 6th, stemmed from the costs of living crisis and cost increases being felt most strongly during 2023 in the private businesses sector. In this regard, Ireland ranked 30 out of 33 for the cost of electricity and 29 out of 33 for the cost of living metrics leading to an impact on our overall macroeconomic standing.
- Ireland scores 13th and 8th respectively for ‘sustainability & climate’ and ‘social, responsibility & governance’.
“The overall fall in the Index by two positions this year to 9th place for Ireland reflects the intense pressure that some private businesses are under and the urgent need for continued supports for this important sector of our economy,” together,” said Colm O’Callaghan, partner at PwC Private.
“Over the last few years, private businesses had to deal with the pandemic, then a period of steep inflation, high interest rates, electricity price increases and other cost pressures often while working with restrained cash flows. For example, PwC’s recent Restructuring Barometer reported that insolvencies in Ireland will likely be close to 1,000 by the end of 2024.
“As it stands, private businesses are facing even more cost pressures from an increased minimum wage, pension auto enrolment and employer PRSI hikes all coming.
“And while it’s good news that the Minister for Finance announced that the interest rate on the tax debt frozen since the pandemic has been cut to zero, and indeed that the Revenue Commissioners have indicated that they will take a flexible approach to the repayments, new or creative long term solutions may still, nevertheless, be ultimately needed to help businesses service or repay the debt due while continuing to grow.”
Other key findings include:
- Switzerland and Denmark have been among the most consistent performers throughout the last three editions of the Index, retaining their ranks of 1 and 5, respectively. Countries such as Sweden, Germany and Netherlands have improved their rankings consistently over the years.
- The UK slipped 5 spots to 7th position, primarily driven by disruptions from Brexit, supply chain breakdowns due to the pandemic exacerbated by the conflict in Ukraine.
- France has declined consistently and has slipped out of the top 10 in the latest Index.
- Germany is in the top three for the first time.
“Ireland must take a whole of Government approach to attracting and retaining private business. We need to continue to prioritise supports to help these businesses meet the increased costs of doing business in Ireland,” said Nicola Quinn, partner, PwC Private.
“We also need to look at additional tax incentives to encourage digital transformation, investment in SMEs and energy transition. We welcome the Government consultation on simplifying Ireland’s business tax regime and it is vital that measures to implement this are brought forward in the next Budget.”
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