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Goodbody acknowledged the 15% tariff on EU goods entering the US is a significant barrier, but far less severe than the punitive rates once threatened. The report notes that the pharmaceutical/medical devices sector is particularly important for Ireland, accounting for 65% of total goods exports and 90% of exports to the US. It said this success brings both opportunity and vulnerability. “Risks prevail in relation to pharmaceuticals, but a 15% tariff cap and some recent deals provide some clarity and guidance,” said Mr O’Leary. “More protectionist economic policies are a challenge for the Irish economy, but the risks around corporation tax receipts have reduced given the modest tax policy changes that the US Congress has voted through. “While protectionist measures remain, the worst tariff fears have not materialised. Similarly, corporate tax proposals that could have undermined Ireland’s competitiveness have largely been shelved.” Goodbody’s report comments that the number of jobs announcements in Ireland by IDA-supported companies was down notably in 2025, down 16% year on year. “We cannot tell from the data whether this weakness is due to the firms’ unwillingness to make these investments public or whether it is reflective of a broader slowing of FDI into Ireland,” said the report. “Indeed, IDA Ireland noted in its first half update that there were 179 separate investments, up by 37% year on year.” The production of ingredients for GLP-1 weight loss drugs have also boosted pharma exports, accounting for the vast bulk of the boom in US exports so far this year, according to Goodbody. Goodbody said for 2026, it expected corporation tax receipts will grow further to €34bn and will account for a record 31% of total tax revenues, partly due to the introduction of the higher 15% tax rate for large companies. Goodbody upgraded its forecast for modified domestic demand – which excludes foreign direct investment - growth to 3.6% for 2025 (from 3%), with growth of 3.2% expected in 2026. But the report notes that underlying deficits persist once excess corporation tax receipts are excluded, and spending continues to outpace sustainable levels. “Discipline on current spending is essential to avoid damaging inflationary pressures.” The report warned that Ireland must address medium-term threats to competitiveness of the economy by focusing its efforts on “the efficient delivery of housing, energy and transport infrastructure. “Financial resources are not the constraint – capital spending is set to reach €19.1bn in 2026, an increase of 12% on 2025. The challenge lies in execution - removing planning bottlenecks, coordinating utilities, and accelerating delivery.” Mr O’Leary said that housing remains the most pressing domestic challenge. “After a policy-drive surge in commencements in 2024, housing starts have fallen sharply this year. Apartments, critical for meeting urban density requirements, face viability hurdles that require targeted interventions. Government measures ranging from rent control reform to VAT reductions aim to bridge the gap, but private investment must play a larger role. Without it, the goal of delivering 50,000–60,000 units annually will remain elusive.” The Goodbody Irish Economic Health Check analysis was carried out by Mr O’Leary and fellow Goodbody economist Max Mulcahy.
