Index shows Irish private businesses still need more support, despite improvement in ranking.
Switzerland, the United Kingdom and Sweden are the top three EMEA countries for private businesses to thrive.
Ireland moves up to 7th position out of 33 EMEA countries for private businesses to thrive in PwC’s 2022 EMEA Private Business Attractiveness Index, up from 14th position last year. Switzerland, the UK and Sweden rank 1st, 2nd and 3rd, respectively, as the best places for private businesses and entrepreneurship to prosper.
The PwC Index ranks the relative attractiveness of private business environments across 33 EMEA countries, based on categories including macroeconomics, the private business landscape, tax and regulatory environment, Environmental, Social, and Governance (ESG) metrics, public health, education, skills and talent, technology infrastructure and the newly introduced startup ecosystem category.
Ireland is a new entrant in the top 10 jurisdictions in 2022, ranking 7th place overall. Ireland has seen one of the largest increases amongst all nations when compared with the 2021 PwC EMEA Private Business Attractiveness Index, moving from 14th place to 7th.
However, despite the significant jump in overall rankings, driven mainly due to the increases in public health metrics (off the back of the nations Covid-19 pandemic response) and the introduction of a number of new key metrics to the PwC EMEA Private Business Attractiveness Index for 2022 which sees Ireland perform well in, there are also underlying worrying trends for the Private Business Landscape on these shores.
The positives driving Ireland’s attractiveness as a place for Private Businesses to thrive include:
Ireland has performed well this year in Health as a result of our national response to the Covid-19 pandemic and overall national life and health expectancy - all leading to Ireland moving from 17th to 4th place.
Ireland retains its rank as 1st among all countries in EMEA in terms of Macroeconomic factors, driven by our strong national GDP and productivity growth.
Ireland has moved from 15th to 9th in terms of Environment, social, governance metrics.
Ireland ranks 7th amongst 33 countries in terms of the newly introduced metrics looking at the Start-up ecosystem and, in particular, scores Ireland the 3rd highest country when it comes to Unicorns per capita.
However, despite Ireland’s strong performance in 2022 there are still some worrying trends impacting the Private Business sector in Ireland:
Despite performing well in overall Macroeconomics metrics, 2022 saw Ireland deteriorate from 5th to 15th place in terms of the inflationary pressures on the Irish economy.
While Ireland continues to be ranked 4th in terms of its Corporate Tax metric, it has further slipped again in terms of Income Tax and Indirect Tax (i.e. VAT etc) metrics to 22nd and 24th respectively. Both Income and Indirect Tax rates have a significant macro economic impact on the performance of Private Businesses, more so than a headline rate of Corporate Tax. Ranking in relative terms behind other territories in these key Tax and Regulatory metrics is having a negative impact on the Irish landscape for private businesses and entrepreneurs.
Ireland ranked 30th out of 33 nations for funding to the Private Sector as a percentage of GDP. The index also suggests that more needs to be spent on Education, scoring Ireland 31st out of 33 EMEA countries for Government expenditure on education.
Finally, Ireland ranked 25th out of 33 EMEA countries for cyber security.
Colm O’Callaghan, Partner, PwC Ireland Entrepreneurial & Private Business Practice, said: “Private businesses are the backbone of our economy, yet PwC’s 2022 Private Business Attractiveness Index highlights that still more support in key areas is needed for these businesses to thrive and be competitive. With a specific focus on Private Businesses, Ireland scores only 22nd out of 33 EMEA countries for income tax rate, while ranking 24th when it comes to our VAT system, both key taxation metrics for Private Businesses. Ireland ranked 30th for funding to the Private Business. Ireland also slipped significantly in terms of ranking for its current Inflation rate to 15th. The Index also suggests that more needs to be spent on education, scoring Ireland 31st out of 33 EMEA countries for Government expenditure on education. Ireland ranked 25th out of 33 EMEA countries for cyber security, suggesting that even more needs to be done to help protect private businesses from the now all too common cyber attacks.”
Overall for EMEA countries, four categories stand out as having a high correlation with countries’ overall ranking:
private business landscape;
Education, skills and talent.
Virtually all of the jurisdictions in the higher reaches of the table perform strongly in these specific key areas, more than making up for perhaps individual lower scores in other categories.
Conversely, the tax and regulatory regime and macroeconomic data category, or even GDP per capita, have less of an overall bearing on the performance of the index. PwC’s Private Business Attractiveness Index underlines that, to attract private business and entrepreneurs, jurisdictions need to strike an even balance across the various categories.
Claire Shanahan, Director, PwC Ireland Entrepreneurial & Private Business Practice, said at the Irish launch of 2022 Index: “The data reveals that the way to become more attractive to Private Businesses is not to focus narrowly on being a leader in just one or two attributes. It’s rather to strike a balance across all the key attributes that Private Businesses are seeking, ranging from education, skills, funding and support, technology and to infrastructure and beyond.”
Explore the full findings at https://www.pwc.com/gx/en/services/entrepreneurial-private-business/emea-private-business.html
PwC’s EMEA Private Business Attractiveness Index rankings are based on scores across 51 metrics divided into eight different categories. We used credible, publicly available sources that measure tangible, on-the-ground activity in each country, both quantitatively and qualitatively. The eight categories capture key factors that shape a jurisdiction’s attractiveness to private businesses:
Private business landscape
Tax and regulatory environment
Environmental, social and governance (ESG) regime
Education, skills and talent
We balanced and weighted these categories to reflect their relative importance to private businesses based on feedback received from our clients. Each of the eight category scores were added together to produce a total EMEA Private Business Attractiveness Index Score out of 100. The jurisdiction with the highest total score was ranked top. The jurisdictions were then divided into categories based on the their total score:
Leading jurisdictions: a total score of more than 60 out of 100
Advancing jurisdictions: a total score of 50 to 60 out of 100
Development jurisdictions: a total score of 40 to 50 out of 100
Emerging jurisdictions: a total score of less than 40 out of 100
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