Reinforcing economic resilience
The newly published Action Plan on Competitiveness and Productivity urges the Government to “control the controllables”, by improving infrastructure, supporting SMEs, expediting the planning process, and investing in AI.
The plan, published by the Department of Enterprise, Trade and Employment in September 2025, includes the introduction of a ‘red tape challenge’ across government, aiming to significantly reduce regulation for small and medium enterprises (SMEs).
The plan identifies six thematic challenges and outlines 85 actions for “enhancing our competitiveness and productivity performance”, with 26 identified as priority actions:
- Productivity: Embracing research, innovation, and skills.
- International: Boosting FDI and exports, and influencing at EU level.
- SMEs: Creating and scaling more SMEs.
- Competition: Regulating for growth and controlling costs.
- Infrastructure: Increasing the State’s capacity to deliver infrastructure.
- Sustainability: Growing sustainable Irish businesses and boosting regional development.
Boosting infrastructure capacity
Building on the National Development Plan (NDP) Review 2025, which outlines €275.4 billion of public capital investment to 2035, the plan contains five actions, three labelled as priorities, to improve infrastructure delivery.
Introduced in June 2025, the Accelerating Infrastructure Taskforce, is to be prioritised to ensure that “barriers to delivery are addressed”. To increase construction sector productivity in national infrastructure and housing programmes, supply and demand-side initiatives at design and procurement stages are prioritised.
Furthermore, the plan encourages government departments to explore further flexibility for fixed-term contract recruitment of specialist expertise, with the aim of embedding such expertise into relevant areas.
Highlighting low productivity in the construction sector, the report says: “Ireland’s infrastructure has continually presented as the most significant detractor from its competitiveness performance.”
The report further highlights planning issues as a significant barrier to infrastructure development, urging the Government to “commence these [Planning and Development Act 2024] reforms to enhance delivery of infrastructure as soon as possible”. It further describes improved planning performance as “critical” for achieving the State’s housing and energy targets.
Artificial intelligence
The plan envisages the establishment of a National Artificial Intelligence Office (NAIO) to fulfil Ireland’s obligations under the EU AI Act, acting as a “focal point for the promotion and adoption of transparent and safe AI in Ireland”.
According to research conducted by Trinity College Dublin in collaboration with Microsoft, 91 per cent of Irish organisations currently use AI “in some form”, doubling since 2024.
To accommodate this rise in demand, the development of next generation sites (NGS) is listed as a priority action in the report. These are large-scale, pre-planned developments designed to attract foreign investment, particularly in AI, advanced manufacturing, and sustainability.
Partly due to the rise in AI usage, the report highlights the need to design a medium-term plan to connect new, very large energy-intensive industries to the electricity grid.
SMEs
While large multinational corporations represented 88 per cent of corporation tax receipts in 2024, SMEs represent most employment opportunities, accounting for 68 per cent of employment in 2022.
According to the OECD, SME business dynamism and startup rates are low and Irish SMEs are relatively inactive in international markets, with stagnant productivity growth.
To counter these concerns, Start-up Ireland, a new central coordinating body encouraging alignment and collaboration across the national start-up ecosystem, will be established, acting as “a focal point for policy, investment, and ecosystem development and aligning with European and global best practices”.
The plan contains a priority action in establishing an SME scaling fund to increase the available public capital to support scaling for SMEs alongside a further action of reviewing tax measures to incentivise investment into start-up and scaling companies.
Commentary
In June 2025, Ibec described the Irish economy as suffering from “poorly designed, overly complex, or excessive regulation”. Furthermore, in May 2025, Banking and Payments Federation Ireland (BPFI) warned that “Ireland risks losing investment” due to what it calls an “increased regulatory burden”.
Launching the report, which seeks to address these challenges, Taoiseach Micheál Martin TD said it “is designed to address the challenges we face and drive the necessary action and reform needed to help Ireland, our businesses, and our people thrive into the future”.
Welcoming the plan, Fergal O’Brien, executive director of lobbying and influence at Ibec, describes the plan as an “important step forward”.
According to the International Institute for Managerial Development, Ireland has the most competitive economy in the Euro area. Likewise, according to the OECD, Ireland is the most productive country in the world, with a GDP per hour worked figure of $164 in 2024.
However, geopolitical strife and global trade tensions have necessitated an economic rethink. In 2024, foreign multinationals paid 29 per cent of all tax collected in the State, an estimated €33 billion. Without this sum, the €30.8 billion current budget surplus would have regressed to a €2.2 billion deficit, highlighting a dangerous overreliance on foreign direct investment to keep the public finances in order.
The ESRI has already warned that the economy is at risk of overheating. The plan, with its aim of further increasing FDI, risks applying greater demand to an already burgeoning economy.
