Ireland among the top half of European countries with a positive private business climate

Ireland scores in the top half of the pack, 14^th out of 34 European countries, in PwC's first EMEA Private Business (EPB) Heatmap, ranking it as an 'advancing jurisdiction' for private businesses to flourish. PwC's EPB Heatmap ranks the attractiveness of 34 EMEA countries across a range of categories including macroeconomics, private business landscape, tax and regulatory environment, environmental, social and governance (ESG) metrics, public health, education, skills and talent, and technology infrastructure. While the data upon which the Heatmap is based relates to late 2021, it provides a useful benchmark on the relative attractiveness of Ireland for entrepreneurs and growing businesses.

Specific factors driving Ireland's score include macroeconomics (first place), environmental, social and governance metrics (15^th place), private business landscape (17^th place), tax and regulatory environment (20^th place) and technology and infrastructure (20^th).

From a macroeconomic and private business landscape standpoint, Ireland is a pro-business, politically stable economy—key ingredients for private businesses to prosper. According to PwC's EPB Heatmap, Ireland's private business sector also benefits from the large number of global multinational companies registered here (fifth place). For example, almost 900 US companies are located in Ireland. They employ over 190,000 people, support a further 152,000 jobs and spend €21.2 billion in our economy each year on wages and goods and services.

Within the ESG metrics category, Ireland ranks fifth on the global gender pay gap index (among the lowest of any of the 34 jurisdictions) and ninth place on global corruption, but 21st place for carbon emissions. According to PwC's 2022 Irish CEO Survey, there remains much work to be done in relation to climate change, with over six out of ten Irish business leaders admitting that they had not yet made a carbon-neutral or net zero commitment.

Within the tax and regulatory category, Ireland scores fourth place for corporate tax, reflecting Ireland's status as a hub for corporations to establish their headquarters here. However, Ireland ranked 19^th for its income tax rate. Given that entrepreneurs' and business owners' income is so intertwined with that of their businesses, Ireland's tax regime needs to support to the maximum extent possible the establishment and growth of indiginous businesses, not to mention their entrepreneurial founders.

Within the technology infrastructure category, Ireland ranks fifth for mobile connectivity and 14^th for broadband access.

Colm O'Callaghan, PwC Ireland Private Business Tax Partner said: "PwC's EMEA Private Business Heatmap suggests that, based on Ireland's overall ranking, there is scope for improvement in Ireland's strategy to help support growing businesses. In particular, Ireland's tax system needs to be more attractive for entrepreneurs to start and grow a business. For example, there is a need for more meaningful measures to incentivise investment and to support entrepreneurs. We want a regime that results in Ireland being an entrepreneur's first and only choice to set up a business, and which should work to ensure that as many businesses as possible start, grow, expand and ultimately stay on these shores. Therefore, it is really important that the Government specifically focuses on supporting the private business sector in the upcoming budget, and future budgets, and looks to other EMEA territories for some best-in-class support for this vital part of our economy".

PwC's EPB Heatmap also recognises other areas for Ireland to focus on, particularly in light of the skills and people shortages many private businesses are experiencing. For example, government spending on education in Ireland at the time of the data analysis was 3.51% of GDP; among the lowest of any jurisdiction ranked in the Heatmap. In this regard, the recent funding plan for third-level education is very welcome.

Other key findings from PwC's EPB Heatmap are as follows:

• The five leading jurisdictions are Switzerland, Norway, UK, Germany and Sweden
• A further 12 jurisdictions (including Ireland with a score of 52.3), are given an "advancing" ranking, with an overall score of at least 50 out of 100
• 12 further jurisdictions are identified as "developing", with an EPB Heatmap score of between 40–50 out of 100
• The UK performs strongly, with a third place ranking overall and within the top five ranked jurisdictions for two different Heatmap categories—private business landscape and education, skills and talent
• The other jurisdictions within the top 10 are France (sixth), Denmark (seventh), Finland (eighth), Spain (ninth) and Luxembourg (10^th)

Colm O'Callaghan concluded: "Having policies that help local private businesses flourish and grow make a notable contribution to a thriving national economy. Private businesses are a key driver of Ireland's economic growth and job creation, playing a major role also in our social development. However, all too often their significant contribution can go largely unnoticed".

"A clear message from the PwC EPB Heatmap is that being a good location for private businesses isn't a matter of size, but focus. The highest-ranking countries in our Heatmap include not only large territories like Germany and the UK, but also smaller nations such as those in the Nordics. So being more competitive in this area is not about being bigger. It's about attention, commitment and concrete actions to support the private business ecosystem".