Tax changes and trade tariffs implemented under the Donald Trump presidency have led to major corporations stalling Irish investments, a new report has said.
Consultant firm Linesight’s latest review of the construction industry in the Republic found the Trump administration was directly affecting Irish construction’s recovery.
The firm’s president Derry Scully said: “In the US, recent taxation changes and the imposition of trade tariffs under the Trump administration are causing uncertainty. These have resulted in some major corporations repatriating funds and others slowing their investment decisions in Ireland and other locations abroad.”
IDA chief Martin Shanahan had warned in June that the policies of President Trump were causing US companies to take stock of their Irish investments, and that there was a risk of projects being pulled.
The report said that although the Brexit effect has so far been “relatively benign”, the slump in sterling was having an adverse effect on construction.
However Brexit has resulted in some positive impacts as international firms chose to relocate to Ireland. However, the report says general uncertainty about Brexit is bad for confidence levels and this may impact on the overall economic recovery.
“The fall in the value of sterling is also having negative implications,” the report said.
Linesight said that the current skills shortage in construction was the “most significant domestic concern”.
- Mr Scully said
The report said that while training in construction-related skills was ramping up again, it will take a number of years to come on stream.
Linesight said at the beginning of the year, it predicted that construction output would reach €20.1bn in 2018, but was now revising the figure close to €21bn — growth of almost 64% in the last three years.
The output in 2018, however, will still only be 55% of the 2007 peak output of €38bn, albeit it that this was unsustainably high, the firm said. It will also lag significantly behind the recognised European sustainable level of 10% to 12% of GDP, it added.
Last year saw the gap between construction tender prices and the input costs of labour and materials continue to close, Linesight said.
Linesight said its research shows that on average tender prices rose by approximately 7.5% during 2017 while construction input costs rose on average by 3%.
Managing director Richard Joyce said: “At Linesight, we are seeing commercial office space, office fit-outs, hospitality, retail, data centre and industrial projects, as well as residential programs, contributing to the growth of the sector in Ireland.
“The most significant domestic challenges for the construction sector remain the skills shortages, increasing tender levels and construction inflation levels, which are fuelled by increasing demand, pressure on wage rates, increases in material prices and regulatory changes.
“Despite these concerns, however, we are confident that the recovery in the Irish construction industry will continue, and that the revised output figures of €21bn will be delivered.”