PESTEL analysis of Ireland (Ireland – country analysis)
This detailed PESTEL analysis of Ireland aims to examine some of the political, economic, social, technological, environmental, and legal factors that affect Ireland today. Ireland is a small, yet an important and powerful country in Europe. It is known as the Republic of Ireland.
Political factors affecting Ireland
Ireland is a parliamentary democracy with a written constitution. The prime minister (Taoiseach) is the head of government who is appointed by the president, the head of state. The president has limited power; however, plays a very important role in representing the country at the national and international levels (BBC, 2018).
Ireland shares an open border with Northern Ireland which is a part of the United Kingdom. 310-mile (500 Kilometre) border of rivers, lakes, farms, roads and villages separates two countries (Colton et al., 2019). However, Brexit (Decision of the UK to come out of the EU) may complicate the free movement of goods and people between Ireland and the UK. Therefore, Ireland is playing an important role in the Brexit discussions between the EU and the UK to come up with solutions on how to manage the movement of people and goods across the border.
Ireland is a member of the European Union (EU). It is also a member of the Eurozone. Amongst other notable organisations it is a member of, are the UN, the World Bank, World Trade Organisation (WTO), Organisation for Economic Cooperation and Development (OECD), and United Nations Educational, Scientific and Cultural Organisation (UNESCO).
Ireland is a politically stable country. Corruption is not a major concern, though it has been reported that companies face bribery risks at local administrative levels. Ireland maintains very good relations with the United Kingdom, and the United States. It has a longstanding policy of military neutrality concerning global and regional conflicts. Its forces play an active part in the UN peacekeeping operations.
Economic factors affecting Ireland
The next element to address in the PESTEL analysis of Ireland is the economic environment. Ireland is a part of the Eurozone and the 33rd largest economy in the world in terms of nominal GDP. Its nominal GDP in 2018 was $375.90 billion (Trading Economics, 2019). The economy has witnessed massive growth over the years; however, as a whole it is a relatively small one compared to other EU and global giants.
Ireland’s low corporate tax rates and a talented workforce have been the main actors behind drawing the attention of many foreign multinationals. The corporate tax rate is 12.5% and relevant laws favour corporations heavily. No wonder why Ireland is often referred to as a tax heaven! The standard personal tax rate in 2019 was 20% which applies to a single person’s income of upto €35,300 and married couple’s €44,300. Anything above these thresholds incurs a 40% tax rate (Citizens Information, 2019).
It is worth mentioning that Irish economy was amongst the first in the EU to recover from the 2008 recession (The Heritage Foundation, 2019). Because of law tax rate, many global companies e.g. Google, Microsoft, and Pfizer used Dublin as a base for their European activities and contributed immensely to recovery of the economy.
Irish economy heavily relies on exports of machinery and equipment, computers, chemicals, medical devices, pharmaceuticals, foodstuffs, and animal products which mostly end up in countries such as the USA, the UK, Belgium-Luxemburg, Germany, and Switzerland (OEC, 2019). Ireland imports a wide variety of things e.g. aircraft, pharmaceuticals, machinery, vehicles, mineral fuels, and electric equipment mostly from countries such as the UK, the USA, Germany, China, and France.
Social factors affecting Ireland
Dublin, the capital of Ireland, is the one of the most cosmopolitan cities in Europe. The people of Ireland love to spend time with their families and travel and around the world. They are naturally polite, flexible and proud of their identity. During weekends, local pubs are packed with people who come for socialising over a cup of tea and the traditional Irish drink.
As of January 2020, the population of Ireland is approximately 5 million. The life expectancy for men is 78 years, while 83 years for women. The major languages in the country are English, and Irish (BBC, 2018). Ireland is one of the wealthiest nations in the world. The cost of living in Dublin is pretty much the same as that in London. However, the living cost in other regions of Ireland is considered low compared to many European countries.
Ireland is faced with some massive social challenges. For instance, approximately 780,000 people live in poverty, though the country is one of the richest in the world. The need for social housing is very high, yet the number being built is very inadequate. Ireland also has some of the highest depression rates in Europe (Hutton, 2018).
Technological factors affecting Ireland
Ireland is a very technologically advanced country. Its ICT industry contributes immensely to the GDP. In addition to housing big companies such as Google, Microsoft, HP, IBM, PayPal, Apple, Facebook, Airbnb, Intel, Intercom, and many more, Ireland, particularly, Dublin, is also the centre of a thriving tech start-ups. In fact, 9 out of the top 10 global ICT companies have a strong base in Ireland.
High quality, and multi-lingual tech talents are available in the country. The IT industry also attracts tech professionals from around the world (IDA Ireland, 2020). However, more ICT skilled people are required to meet the demands generated by massive opportunities. According to OECD (2018) 57% of adults in Ireland have no ICT skills or have very limited skills necessary. Similarly, the country’s failure to connect more than half a million homes and businesses to broadband puts rural communities at disadvantage in a digital age (Hutton, 2018).
Environmental factors affecting Ireland
Beautiful scenery and hundreds of stunning beaches in Ireland mesmerise both locals and tourists. However, there are some environmental issues that challenge the country. For instance, Irish weather is notoriously rainy. People are also concerned about air and water pollution, noise, emissions of greenhouse gases, and loss of biodiversity. However, it is worth noting that the country has been hailed for being the second after the UK to declare a climate emergency.
Legal factors affecting Ireland
The last and a very important element to address in the PESTEL analysis of Ireland is the legal landscape of the country. The Irish government is very business friendly and laws favour the establishment and operation of corporations greatly. Tax rates are very favourable to businesses. At the same time, employees enjoy a number of employment rights e.g. minimum wage, maximum working hours, annual leave, maternity and paternity leave, and public holidays. Everyone has the right to be treated equally; and therefore, any discrimination is unlawful.
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Last update: 01 January 2020
BBC (2018) Ireland country profile, available at: https://www.bbc.co.uk/news/world-europe-17473476 (accessed 15 December 2019)
Bryn Colton, B., Dodge, S. and Jefferson, R. (2019) The 310 Miles Breaking Brexit, available at: https://www.bloomberg.com/features/2019-irish-border/ (accessed 21 December 2019)
Citizens Information (2019) How your income tax is calculated, available at: https://www.citizensinformation.ie/en/money_and_tax/tax/income_tax/how_your_tax_is_calculated.html (accessed 20 December 2019)
Hutton, B. (2018) Government lambasted for approach to big social problems, available at: https://www.irishtimes.com/news/social-affairs/government-lambasted-for-approach-to-big-social-problems-1.3717815 (accessed 01 January 2020)
IDA Ireland (2020) Information communications technology, available at: https://www.idaireland.com/doing-business-here/industry-sectors/ict (accessed 10 January 2020)
OEC (2019) Ireland, available at: https://oec.world/en/profile/country/irl/ (accessed 21 December 2019)
Trading Economics (2019) Ireland GDP, available at: https://tradingeconomics.com/ireland/gdp (accessed 22 December 2019)
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Author: Jo David
Jo David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.