{"text":[[{"start":5.6,"text":"Séamus McCann feels he was doing everything “right”. He worked for a degree in commerce and landed a job as a consultant at a large financial services firm in Dublin. Yet like nearly two-thirds of young Irish adults, McCann, 24, is stuck in his childhood bedroom, unable to afford a home of his own."}],[{"start":26.434,"text":"His is a lament that resonates across Ireland. The country’s economic fortunes have rarely been better, with rapid growth and billions in tax revenues in its coffers. Yet many of its people feel worse off than ever. More fundamentally, many worry that the sources of Ireland’s wealth are fragile and that it is not making best use of its windfall."}],[{"start":46.08,"text":"Housing is far from the only problem. Much of the country’s infrastructure and services — including transport, health, water and energy — are decades out of date or simply insufficient for a population that has increased by 10 per cent since 2020."}],[{"start":62.58,"text":"Despite record levels of employment and average wages growing faster than prices, a recent opinion poll found 51 per cent in Ireland were finding it “a lot” harder to manage. Nearly 18,000 people are homeless — a record figure. Ireland has the highest electricity bills in the EU, and the value of household energy arrears is going up."}],[{"start":82.169,"text":"“Everything seems to be going great financially — the government is boasting about the millions and billions pouring into the economy,” says McCann. “But the gap is growing . . . it shouldn’t feel like a privilege to have what’s normal.”"}],[{"start":null,"text":"

"}],[{"start":97.45,"text":"The resources available to the state stand in stark contrast to many of the country’s European peers. Next year, Ireland expects a budget surplus of nearly €10bn at a time when France, Germany, the UK and others are battling painful deficits."}],[{"start":110.895,"text":"Such fiscal good fortunes are the result of a fivefold increase in corporation tax revenues over the past decade paid by a handful of US multinational tech and pharma companies. Almost half of Ireland’s corporation tax haul comes from just three companies: Apple, Eli Lilly and Microsoft."}],[{"start":128.206,"text":"A quirk of international accounting allows the government to collect tax from companies even if they produce their goods elsewhere, provided they manage intellectual property in Ireland and have a real presence in the country."}],[{"start":140.97,"text":"Apple, for instance, makes iPhones in China but paid Ireland $17bn in corporation tax in its last financial year, a figure that was boosted after the EU’s top court ordered the company to pay €13bn in back taxes in 2024."}],[{"start":155.76,"text":"Overall, the country’s corporation tax receipts topped €34bn this year and are expected to rise to €39bn next year — almost enough to fund the government’s entire housing and health budget."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":169.23,"text":"Yet some warn that Ireland is not using those resources responsibly, given the scale of its dependence on the profitability of a handful of big global tech and pharma companies."}],[{"start":179.576,"text":"State spending has doubled in the past decade. Much of that is on day-to-day expenditure, on areas such as welfare and health, which together amount to nearly half of the spending budgeted for next year, although the government also plans to invest a record €20.3bn in electricity, water, transport and housing projects. The independent budget watchdog, the Irish Fiscal Advisory Council, warns that six out of every seven euros of corporation tax is now spent, not saved."}],[{"start":209.459,"text":"At the same time, infrastructure is lagging. Ireland’s health service has more than 1mn people on hospital waiting lists for the first time. The capital city of a country famous for its rain is running out of water amid delays to a landmark project."}],[{"start":225.36,"text":"Despite some progress, housing remains an urgent problem. Although Ireland is on track to build 40,000 homes this year, that is still nearly a third below what the Central Bank estimates is needed annually until the middle of the century."}],[{"start":238.093,"text":"And while the budget surplus has enabled the country to splash out on cost-of-living and fuel supports to mitigate the high energy prices, it is not advancing fast enough with offshore wind farms that could limit its heavy reliance on imports."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":251.432,"text":"“A lot of people feel the country is very under-developed for the level of wealth we’re supposed to have,” says Aoife, a 34-year-old librarian renting a home and struggling to save for a mortgage, who asked not to give her full name."}],[{"start":264.91,"text":"In the eyes of Austin Hughes, an economic commentator tracking living standards, Ireland is now split into “the comfortable, the coping and, in the context of rising cost of living pressures, increasingly the clinging on”."}],[{"start":265.41,"text":"A tale of three products"}],[{"start":278.53,"text":"Kinsale, a pretty fishing town on Ireland’s south coast, is home to a giant factory producing something most people have never heard of."}],[{"start":285.573,"text":"The product in question is tirzepatide, and it is made by US pharmaceutical company Eli Lilly as the active ingredient for its blockbuster weight-loss drugs Mounjaro and Zepbound. While helping millions worldwide to slim, tirzepatide is one of the reasons Ireland’s economy is expanding so fast."}],[{"start":303.395,"text":"Foreign investment from companies such as Eli Lilly has been transformative for Ireland, once a rural economy that suffered periods of such hardship that it regularly exported its workers."}],[{"start":314.72,"text":"Low rates of corporation tax designed to attract investment “were initially a loss-leader, a sacrifice we made to keep employment”, says one senior government official."}],[{"start":323.958,"text":"Ireland now charges 12.5 per cent but big companies have to pay a top-up to 15 per cent under OECD rules agreed in 2021. The government says that will bring in another €3.5bn a year."}],[{"start":337.191,"text":"Such trends have made the country dependent not only on the revenues from a few companies but also on their signature products: Eli Lilly’s tirzepatide, Apple’s iPhone and computers and Microsoft’s software applications."}],[{"start":null,"text":""}],[{"start":350.084,"text":"If their contribution to corporation tax receipts is stripped out on the basis that it is a potentially transitory windfall that cannot be relied on, Ireland looks dangerously like it is living beyond its means."}],[{"start":362.72,"text":"The government estimates that €23bn of next year’s corporation tax receipts are related to activity abroad that is taxed in Ireland. Without that, Ireland would have been running a deficit since 2022 and would face a budget hole of more than €13bn next year, rather than a surplus of nearly €10bn. By the end of the decade, the country could be €20bn in the red."}],[{"start":384.04,"text":"“We are in a bit of a conundrum because the perception is that the government has a lot of money to spend,” says Emma Howard, a lecturer in economics at Technological University Dublin."}],[{"start":393.978,"text":"“But it is very much a house of cards, because increasingly, we are relying on a source of revenue that is not based on any economic activity in Ireland to fund public services, investment spending and tax cuts.”"}],[{"start":406.765,"text":"Some are relaxed about the risks at the heart of Ireland’s government finances."}],[{"start":411.033,"text":"Jay Bourke, an entrepreneur who launched several high-profile pubs and clubs during the Celtic Tiger boom years of the mid-1990s to the mid-2000s before going broke, believes the good times will continue."}],[{"start":428.491,"text":"“It’s almost impossible for them [the government] to run out of money,” he says. Big-name companies like Intel, which in July announced a €5bn investment to expand its Irish facility, “aren’t going away — it’s a long-term strategy”, he says."}],[{"start":438.578,"text":"“It doesn’t matter that the government is spending rather than saving its money, says Bourke, who is back from bankruptcy with a new pub. “We need roads, we need water . . . we’re in a virtuous cycle and I don’t think we should be afraid of that.”"}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":451.52,"text":"Still, trying to make up for long-overdue capital spending at a time when the population is growing is like trying to change a wheel on a moving car."}],[{"start":460.435,"text":"“Other countries had the financial resources to invest in their infrastructure in the 1970s and 1980s,” says Niall Conroy, acting chief economist at the Irish Fiscal Advisory Council watchdog."}],[{"start":472.115,"text":"But at the time Ireland was struggling with recession, high unemployment and debt crises, he adds, “so we’re trying to catch up to the infrastructure of other European countries in a period where the population is expanding. It’s a challenge to do that quickly.”"}],[{"start":491.36,"text":"Or cheaply. Dublin’s metro — or lack of it — is a prime example: an underground rail system has been planned since the 1970s; it is slated finally to start construction next year. Estimated costs have soared to as much as €17.5bn."}],[{"start":502.16,"text":"The watchdog has no issue with the government’s capital expenditure plans. But it has been fiercely critical of Dublin’s “blistering” overspending. Far from sticking to the 5 per cent limit in spending growth it announced in 2021, the government has increased spending by 10 per cent on average in each of the past five years, the Fiscal Advisory Council says."}],[{"start":520.72,"text":"With cash at its disposal, the government has resorted to additional spending in between budgets, for goals such as easing fuel price rises after large-scale protests this year, even though pumping cash into an expanding economy can feed inflation."}],[{"start":534.96,"text":"“At the moment we feel the economy is in a very strong place,” adds Conroy. “Employment is at record highs. Economics 101 would suggest you don’t need the government putting in a lot of additional resources.”"}],[{"start":546.96,"text":"The government insists it is being prudent. It wants to be like Norway, which saves its oil earnings into a $2.4tn sovereign wealth fund, and not the UK, which frittered away its North Sea oil revenues for years instead of amassing what chancellor John Healey acknowledges could have been a “trillion-pound” fund by now."}],[{"start":565.04,"text":"Ireland has set up two sovereign wealth funds and has hired the former head of Norway’s fund, Knut Kjaer, to help oversee them. It has committed to saving 0.8 per cent of GDP every year into the Future Ireland Fund, which it will not be able to touch until 2041, and will also pay €2bn into the Infrastructure, Climate and Nature Fund every year until 2030, although it can draw on that earlier."}],[{"start":589.44,"text":"“In an Ireland context, these are big numbers. The Future Ireland Fund and the ICNF could reach €50bn by 2030,” says Frank O’Connor, chief executive of the National Treasury Management Agency, which invests the funds in global equities and other assets. “The government is looking for this to be intergenerational.”"}],[{"start":609.308,"text":"By the end of the year, Ireland will have accumulated €23bn across the two funds. “People often debate whether it should be less or more,” O’Connor says. “Despite many demands on government, they’re still putting money away . . . It has been a prudent decision.”"}],[{"start":624.498,"text":"The government expects to fund its contributions from its surpluses until 2028. But buried deep in Ireland’s financial forecasts is the acknowledgment that it may have to borrow to meet its savings commitments by the end of the decade."}],[{"start":637.92,"text":"In 2029, the government expects a surplus of €935mn but has committed to saving €7.2bn into the funds. In 2030, its forecast €5.7bn surplus is still set to fall short of the €7.5bn saving requirement for that year."}],[{"start":655.132,"text":"“We see it as borrowing to invest, rather than borrowing to save,” says the senior government official. But given Ireland’s spendthrift ways, he welcomes putting money aside. “It keeps it away from the government,” he adds."}],[{"start":655.632,"text":"The BlackBerry precedent"}],[{"start":668.64,"text":"By many measures, the Irish are doing well."}],[{"start":671.868,"text":"Households have savings of €177bn, a rise of €9bn over the past year. Their assets in cash and bank deposits are also above the EU average. In the first quarter of this year, the net wealth of Irish households hit €1.4tn, mostly due to the value of property. Indeed, the average Irish homeowner is now — on paper — a millionaire."}],[{"start":694.439,"text":"Workers at the multinational companies that pay so much of the country’s corporation tax also pay a fifth of Ireland’s income tax from salaries that are three times the national average. Ireland has the highest level of university graduates in the EU."}],[{"start":708.73,"text":"“People are reading that doomsday is about to come, but they’ve been hearing that for years. They see the companies that pay our bills have never been doing better,” says Sinéad O’Sullivan, an economist and writer. “Our issues are no longer connected to the money that multinationals bring in.”"}],[{"start":723.561,"text":"Others complain that Ireland’s real problem is its apparent inability to deliver on its ambitions."}],[{"start":729.084,"text":"“In the last 20 years in Ireland, the time it takes to deliver an infrastructure project has doubled,” says Seán O’Driscoll, who serves on a task force set up by the government to accelerate infrastructure projects."}],[{"start":740.881,"text":"The central bank recently warned that it now takes four years to build a house, from lodging planning permission to completion, twice as long as a decade ago. One of the country’s flagship projects, a new children’s hospital, is four years behind schedule, more than three times over budget and still not open."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":757.68,"text":"One of the principal reasons Ireland has “come unstuck” on delivering infrastructure is a planning system in which projects have routinely been held up for years in the courts, O’Driscoll says. But a cap on the legal costs that challengers can recover has already led to a “notable” decrease in cases, he adds."}],[{"start":777,"text":"Ireland’s economy crashed so hard after the so-called Celtic Tiger boom that it needed a €67.5bn IMF and EU bailout — equal to 40 per cent of Ireland’s economy. Since then, O’Driscoll argues, the country has been stymied by over-regulation, including in the implementation of EU directives, that made the public sector “completely risk averse”."}],[{"start":798.633,"text":"But while he worries that “we have nearly broken the country on the back of trying to ensure that it never goes broke again”, he insists that “definitively, we’re on the road to fixing it”."}],[{"start":809.06,"text":"Ireland can also look attractive to international investors compared to other markets. At times this year its short-term borrowing costs have dipped below those of Germany, the EU’s largest economy."}],[{"start":820.359,"text":"Still, other EU countries have bristled at the extent it is profiting from international tax competition, making it vulnerable if the underlying rules were to change."}],[{"start":829.689,"text":"Ireland’s recent history of boom and bust has also sharpened fears that the AI bubble could rapidly deflate, with knock-on effects for a country where the sector’s biggest players — OpenAI, Anthropic, Google and Meta — have all placed their European headquarters."}],[{"start":845.6,"text":"For Howard, the lecturer at Technological University Dublin, “it’s a question of when, not if”."}],[{"start":852,"text":"But she takes heart from the fact that Apple and Eli Lilly — two of the three biggest taxpayers — are not exposed to the AI build-out. She adds: “In the short run, I don’t see a sudden large drop in receipts, more like a decline over time we need to plan for.”"}],[{"start":866.64,"text":"Conroy at the Fiscal Council also sees Ireland’s fiscal dependence on a small group of companies as more of a slow-burn problem — but no less serious for that."}],[{"start":877.84,"text":"He reckons Ireland could probably lose one of its three top corporate taxpayers and still be in surplus."}],[{"start":881.92,"text":"“In the short term, we don’t anticipate a dramatic fall in Ireland’s corporation tax receipts,” he says. “But the nature of these firms is that they do seem invincible — until they aren’t. Like, there was a time when BlackBerry phones were all the rage.”"}],[{"start":896.6,"text":"Data visualisation by Keith Fray"}],[{"start":898.52,"text":"Letter in response:"}],[{"start":899.52,"text":"Ireland’s real economic strength is its capacity for reinvention / From Conor Skehan, Former Chair of the Housing Agency, Malahide, County Dublin, Ireland"}],[{"start":911.44,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794051090_9167.mp3"}