EU Commission warns Ireland's deep economic ties with the US pose a notable risk 

The Irish economy entered 2025 in a strong position with real GDP rising 1.2% in 2024, driven by a rebound in exports. Picture Dan Linehan

Ireland’s GDP is forecast to grow by 3.4% this year, according to the European Commission's Spring 2025 Economic Forecast.

However, it said Ireland's deep economic ties to the US pose notable downward risks in the context of rising protectionism. "The general government balance is forecast to remain in surplus, though significant risks arise from the uncertain outlook for corporate tax revenues," the forecast states.

The report said the Irish economy entered 2025 in a strong position with real GDP rising 1.2% in 2024, driven by a rebound in exports, while modified domestic demand grew by 2.7%, supported by a robust labour market and easing inflation.

The commission said Ireland's debt levels will continue to fall, but not as quickly if budget surpluses were not transferred to the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.

They warned that a weaker performance or a downsizing of the multinational-dominated sectors would significantly affect tax revenues.

"The outlook for corporate income tax revenues is particularly uncertain, given their concentration among a relatively small number of large multinational companies and a large portion estimated to be windfall," the Commission said.

The overall European economy began 2025 on a somewhat stronger footing than anticipated, the Commission said. It is projected to keep growing at a modest rate this year, with growth expected to pick up in 2026, despite heightened global policy uncertainty and trade tensions.

The Commission's Spring 2025 Economic Forecast projects real GDP to grow by 1.1% in 2025 in the EU and 0.9% in the euro area, broadly the same pace as recorded in 2024.