Chapter 23. Ireland

Figure 23.1. Structure and performance of the SME sector in Ireland
Figure 23.1. Structure and performance of the SME sector in Ireland

Source: A, C, D. OECD Structural and Demographic Business Statistics Database 2018, http://dx.doi.org/10.1787/sdbs-data-en; Source: B. For creations (employer enterprise births), OECD Structural and Demographic Business Statistics Database 2018; for bankruptcies, OECD Timely Indicators of Entrepreneurship Database 2018. Source: E. OECD Structural and Demographic Business Statistics Database 2018, Employer Business Demography dataset.

 StatLink http://dx.doi.org/10.1787/888933925236

SME business conditions and access to strategic resources

Institutional and regulatory framework

Ireland is among the ten most competitive countries in the world when it comes to business regulation and red tape according to World Bank data. Ireland scores particularly well in terms of starting a business, paying taxes and protecting minority investors. The eGovernment Strategy (2017–20) aims to further improve access to and interaction with government services by businesses (and citizens). It aims, in broad terms, to comply as much as possible with the following general principles of the EU eGovernment Action Plan, i.e. 1) Digital by Default, 2) Only Once Principle, 3) Inclusiveness and Accessibility, 4) Openness and Transparency, 5) Cross-border by Default, 6) Interoperability by Default, 7) Trustworthiness and Security.

Market conditions

The Irish Government actively promotes foreign direct investment (FDI), and it has been very successful in attracting investments from foreign companies, especially from the US, to the benefit of the overall economy. IDA Ireland has overall responsibility for promoting and facilitating FDI, while Enterprise Ireland promotes joint ventures and strategic alliances between indigenous and foreign companies. In 2017, 455 meetings were scheduled between Irish exporters and multinationals during a two-day Enterprise Ireland/IDA Ireland “Global Sourcing” initiative. The purpose was to provide SMEs with opportunities to become suppliers to these companies, as well as to stimulate collaboration more generally.

Infrastructure

Broadband access remains sketchy outside of Dublin and other urban areas, limiting SME potential in more rural and remote areas of Ireland. In recognition of the importance of broadband access, the Government’s National Broadband Plan (NBP) aims to ensure that all businesses (and citizens) have access to high speed broadband irrespective of their geographical location. The plan, launched in 2012 was considerably updated in December 2015, to focus attention and channel government resources to regions where commercial investment is unlikely to materialise otherwise (around 30% of the country).

Access to finance

Access to finance remains problematic for many Irish SMEs, as comparative business survey data across the OECD illustrates. Interest rates charged to SMEs in May 2018 stood at 4%, almost twice the EU average and the use of personal guarantees appears to be more widespread. In view of the planned exit of the UK, Irelands’s foremost trading partner, from the EU, the Brexit Loan Scheme was lauched in March 2018 providing loans to eligible SMEs ranging from EUR 25 000 to EUR 1.5 million at an interest of 4% or below. Furthermore the Future Growth Loan Scheme announced in Budget 2019 will make a fund of up to EUR 300 million available to SMEs for terms of 8-10 years. The scheme will support long-term, strategic investment in a post-Brexit environment. Finance provided under the scheme will be competitively priced and have favourable terms, with loans of up to EUR 500 000 unsecured. The scheme is to be launched in early 2019 and will sit alongside the Brexit Loan Scheme as part of a suite of Brexit supports.

Access to skills

Ireland is a strong innovator and its relative innovation score in the European Innovation Scoreboard has improved between 2010 and 2017. The government introduced “Innovation 2020” in December 2015, a five-year strategy on R&D, science and technology with annual progress reports to monitor if key performance indicators are moving in the right direction. A key ambition of the Strategy is to increase total investment in R&D in Ireland, led by the private sector, to 2.5% of GNP. The establishment of private-public partnerships is a central part of achieving this goal.

Access to innovation assets

Ireland does well on innovation and its performance has increased relative to the EU average between 2010 and 2017. Nonetheless, the Irish Government introduced “Innovation 2020” in December 2015, a five year strategy on research and development, science and technology with annual progress reports to monitor if key performance indicators are moving in the right direction. A key ambition of the Strategy is to increase total investment in R&D in Ireland, led by the private sector, to 2.5% of GNP. The establishment of private-public partnerships is a central part of achieving this goal.

The full country profile is available at https://doi.org/10.1787/34907e9c-en

References

Department of Communications, Energy and Natural Resources (2015), National Broadband Plan - Connecting Communities, https://www.dccae.gov.ie/documents/Updated%20Strategy%20December%202015.pdf.

Department of Public Expenditure and Reform (2017), eGovernment Strategy 2017–2020, https://egovstrategy.gov.ie/wp-content/uploads/2017/07/eGovernment-Strategy-2017-2020.pdf.

EC (2018), Ireland, European Innovation Scoreboard 2018, European Commission, https://ec.europa.eu/docsroom/documents/30686.

Interdepartmental Committee on Science, Technology and Innovation (2015), Innovation 2020 - Excellence, Talent, Impact - Ireland's Strategy for Research and Development, Science and Technology, https://dbei.gov.ie/en/Publications/Publication-files/Innovation-2020.pdf.

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