Could we see a Celtic Tiger Mark Two?

Keeping the positivity going, the Irish Times recently reported Mr Douglas McWilliams – a former chief economic adviser to the CBI and chief economist for IBM UK – is extraordinary bullish about Ireland from 2011 out.

“Because of the huge boost to Irish competitiveness from lower wages, combined with the likelihood of a falling euro and strong economic growth in Germany and other parts of Northern Europe, a ‘Celtic Tiger Mark Two’ era could start as early as 2012 with economic growth above 6 per cent for at least four years,” he suggests.

The icing on the cake is that buoyant tax revenues could wipe out the Budget deficit by 2013 and rather than sell off the banks the Government should hold its nerve, he argues .

Budget and its impact on the IT Job Sector

So the dust is starting to settle following one the hardest hitting budgets in the history of the state. Now that we’ve had the chance to crunch the numbers and see how it affects us as individuals, we can focus on what it will mean to the IT sector and those working within it?

The key announcement for me is that corporation tax remains at 12.5%. In my opinion that is the significant driver in Ireland’s economic recovery. Foreign investment in Ireland will keep people in jobs and create new jobs, which will improve confidence and get people spending again.

In December, the IDA announced the creation of 500 new roles with Citi, who are already based in Ireland and through new businesses including  Genband and Aspect. These organisations feed local businesses that are in the supply chain and boost the local economy by creating employment.

Those who work in the IT sector are going to have less money in their pockets as a result of the broadening of the income tax bands. Many will be brought into the 41 per cent bracket for the first time. In addition, the new universal social welfare contribution will impact everyone.

Whilst some of the budget measures are extremely harsh,I don’t beleive it will lead to mass emigration amongst skilled IT professionals. They will still be enticed by the major IT companies who continue to invest in Ireland’s knowledge economy and create opportunities, demonstrated by last weeks rumours that Twitter is considering Ireland as it’s EMEA HQ.

In addition, there were no measures introduced to tax limited company directors more aggressively than PAYE employees. This has  always been a concern for these professionals and the multinational organisations that engage them.

No one will escape the impact of these tough austerity measures, but it is my hope that the stance taken on corporation tax should guarantee jobs through this tough period.