Cost of doing business sees Ireland drop two places in global ranking

Ireland ranked ninth among 33 major economies as a location for private businesses to thrive

PwC predicts insolvencies in Ireland will likely be close to 1,000 by the end of 2024. File picture

The cost-of-living crisis has seen Ireland drop two places in a global ranking as a location for private businesses to thrive.

In its latest update, PwC's EMEA Private Business Attractiveness Index now ranked Ireland ninth among 33 major EMEA economies. While the ranking is a jump from 14th place two years ago, it is a drop from the seventh position last year.

Switzerland, Sweden, Germany, Netherlands, Denmark, Norway, United Kingdom, Finland, Ireland and Spain form the top 10 jurisdictions. The UK dropped from second to seventh, primarily driven by disruptions from Brexit and supply chain breakdowns.

The index ranks the attractiveness of the environment and conditions needed for private businesses to thrive, based on nine categories including macroeconomics, private business landscape, tax and regulatory environment, education, skills and talent, technology infrastructure and startup ecosystem.

Ireland fell in its ranking for ‘macroeconomics’ to sixth position, from first place last year, largely stemming from the cost-of-living crisis and cost increases felt last year in the private sector. PwC said Ireland ranked 30 out of 33 for the cost of electricity and 29 out of 33 for the cost-of-living metrics.

Ireland did improve its position by one place to sixth for ‘start-up ecosystem’ and also improved its ranking to ninth place from 12th last year for ‘education, skills and talent’.

Colm O’Callaghan, partner at PwC Private, said Ireland's overall ranking reflected the intense pressure some private businesses were under and the urgent need for continued support for the sector.

"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," he said.

Nicola Quinn, partner at PwC Private, said additional tax incentives were needed 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.”