Ireland’s economic narrative in recent decades has been one of remarkable growth, a Celtic Tiger reborn as a dynamic, modern technological hub and a magnet for foreign direct investment.
Yet, beneath the surface of robust gross domestic product figures and booming multinational activity lies a troubling paradox: a nation with immense wealth creation that simultaneously exhibits one of Europe’s most inequitable and unproductive savings cultures.
A meagre 1 per cent of Irish household financial assets is invested in shares or funds, a stark contrast to other developed economies, while a staggering 55 per cent remains tied to property.
The vast majority of individual savings, meanwhile, sit idle in low-yield deposit accounts, systematically eroded by inflation and offering no pathway to participate in the nation’s productive capital or share in its economic success.
This imbalance is not merely an economic inefficiency; it represents a dangerous concentration of wealth, primarily in a single, often volatile asset class. This reliance on property has not only exacerbated Ireland’s chronic housing crisis but also precluded the vast majority of its citizens from owning a direct stake in the very economy they help create.
It contributes directly to rising social and economic inequality, fostering a two-tiered system where those with inherited or accumulated property accumulate wealth effortlessly, while others, particularly younger generations, fall further behind, unable to access the compounding power of capital.
Such a model is inherently fragile, prone to speculative bubbles and fundamentally fails to deliver the full promise of broad-based prosperity.
To address this systemic flaw and unlock Ireland’s full potential, the Government should consider a direct, scalable and genuinely transformative solution: a universal digital investment account for every newborn, with initial €1,000 funding provided by government.
This initial capital would be strategically invested in a diversified, broad-based Irish equity exchange-traded fund.
With robust, legally mandated protections designed to keep the money invested until adulthood, this would immediately give every child a tangible stake in the economy.
Crucially, it would also cultivate financial literacy from an early age, fostering a generational shift in how citizens view saving and investing and allowing the mass market to benefit from the productive compounding of savings, thereby fostering genuine intergenerational fairness and economic mobility.
The concept draws its inspiration from successful global movements aimed at democratising capital, notably the Invest In America initiative, now known as Trump Accounts, which meant child savings account provisions were integrated into US president Donald Trump’s “Big, Beautiful Bill” signed into law on July 4th.
Every child born in the US between this year and 2028 will receive such an account with a $1,000 government-funded balance.
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Such precedents demonstrate the political viability and social appeal of empowering citizens through universal capital ownership. These are not merely handouts; they are strategic investments in human capital and national resilience.
The Irish Government is already engaged in two related reform efforts. It has begun the process of overhauling the existing punitive tax framework for retail investing, a long-overdue reform for which a definitive timeline is yet to be established. Alongside this, the “Acorn Account” initiative, a newborn savings account, is also being pursued.
However, the current iteration of the Acorn Account, with its overly conservative, bond-heavy portfolio, severely limits growth potential and fails to harness the exponential compounding effect that equities provide over multidecade horizons.
While steps in the right direction, they risk falling short if not synergistically integrated.
The tax regime continues to actively discourage long-term market participation and disproportionately disadvantage smaller, less sophisticated retail investors.
A simplified, equitable tax regime must go hand-in-hand with a growth-oriented universal savings vehicle, one that unlocks the full potential of national capital.
Compounding at a conservative average annual rate of 7 per cent, such a fund could grows to approximately €5,400 by age 25. By retirement, without any further contributions from the individual, that initial €1,000 could realistically exceed €81,000.
Imagine the difference this sum could make for a young adult, potentially funding higher education, providing a deposit for a home or seeding a new business venture.
The potential for private sector involvement through matched contributions – perhaps from employers, family members or even philanthropic organisations – could significantly amplify this effect, creating a powerful virtuous cycle of saving, investment and national prosperity.
Beyond the undeniable individual benefits, widespread equity ownership can fundamentally deepen Ireland’s domestic capital markets, providing much-needed patient capital to indigenous Irish businesses and fostering local innovation. It would significantly reduce the economy’s precarious dependence on volatile property markets.
More fundamentally, it would foster a robust culture of long-term investment and financial resilience, empowering citizens to become active owners in their economy, not just consumers, employees or tenants.
The cost is remarkably modest: estimated at €55 million to €65 million annually, representing less than 0.1 per cent of the national budget. This is a trivial price for dismantling long-standing wealth disparities and building a more robust, equitable and ultimately more resilient economy for future generations.
The moment is ripe for Ireland to seize this opportunity. As a nimble, open economy within the European Union, Ireland possesses the agility and global reputation to pioneer this next generation of inclusive capitalism.
By fundamentally resetting its investment culture, diversifying household savings away from property and giving every child a real, tangible stake in the State’s prosperity, Ireland cannot only secure its own economic future but also provide a practical blueprint for other European nations grappling with similar challenges of wealth inequality and the urgent need for broader capital formation.
It is a bold, yet entirely achievable, vision for a fairer and more dynamic Ireland.
- Cathal Carroll is a partner at venture capital firm VEF. He is writing in a personal capacity.
