The pandemic was a test of strength for our economy. Thankfully, we have passed that test, with employment and growth back on track after two very difficult and uncertain years. We face strong economic headwinds, of course. War in Ukraine has led to an energy price surge and a cost-of-living crisis that will be uppermost in the mind of the Government at this time of year.
So too, though, should it consider those sectors that offer Ireland a path to solid and sustainable growth in the years to come. Measures taken now to help those sectors will reap great economic dividends for the country in the future. Financial services is a case in point.
Lest it be thought of as simply a Dublin story, consider that almost half of those more than 100,000 jobs are based outside the capital in various parts of the country
The growth in financial services – and the establishment of Ireland as a world leader in those services – is something that should be recognised. Out of a total of 2.5 million people in work here, over 100,000 work in the financial services sector, in well-paid jobs with average earnings above €60,000. Ireland services more than €5.2 trillion of assets and is the third-largest funds domicile in the world. Its contribution to the Irish economy (or gross value added) is in excess of €21.7 billion.
And lest it be thought of as simply a Dublin story, consider that almost half of those more than 100,000 jobs are based outside the capital in various parts of the country.
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Based on the success to date of Ireland’s financial services sector and its resilience during the pandemic, we should now take steps to move to the next level and establish the country as a top 20 global financial centre by 2025. This would represent a 50 per cent improvement on where we currently stand. It is an ambitious but attainable goal that will yield greater consumer choice, highly skilled professional careers, and increased tax revenues for the exchequer.
One of the great potential growth areas when it comes to financial services lies in digitally enabled financial services or fintech. It is no exaggeration to say that fintech is now where internet-based companies such as Google, Facebook and Amazon were around 20 years ago. Exponential growth awaits – growth that will disrupt how we interact with our money and give individuals and companies a new consumer experience and access to more choice and competition.
Ireland can lead the fintech revolution by facilitating greater collaboration between the tech giants and financial services companies that are located here; and by Government signalling its strong intent to be a leader in this space and ensure an efficient and robust regulatory approval system.
Another area of financial services that offers huge potential for the economy is the aircraft-leasing sector. Fourteen of the top 15 global aircraft lessors are already located here and the aviation sector, as evidenced by the surge in airport traffic this summer, is thriving. But future growth in air travel poses a problem for policymakers struggling to keep emissions lower.
Climate action
One of the key sustainability initiatives Aircraft Leasing Ireland (which is part of Financial Services Ireland) is championing is the acceleration of the development, manufacture, distribution and use of sustainable aviation fuels (SAF), both in Ireland and globally. The Government should do all it can to support this development, which has the potential to greatly help meet our carbon emission reductions targets.
Keeping the focus on climate action, Ireland should seek to build on the global growth in sustainable finance more generally. It can do that in two ways – at a national level, by availing of sustainable finance products that will fundamentally support Ireland in meeting its climate action targets and secondly, by seeking to make Ireland an international destination for the sustainable finance operations of global corporations through a dynamic talent and skills strategy to attract workers from abroad. This also necessitates action on cost of living, housing and quality of life challenges.
While the years that lie ahead may be uncertain, the great potential that the financial services sector offers the Irish economy is not in doubt
The Government has always been supportive of our sector. Given our size and our potential for growth, it makes sense to be. Its strategy for financial services – Ireland for Finance – is due to be refreshed and published shortly. Financial Services Ireland is a partner in its implementation.
While the years that lie ahead may be uncertain, the great potential that the financial services sector offers the Irish economy is not in doubt. Government and the sector should take a joined-up approach to optimise the potential.
Patricia Callan is director of Financial Services Ireland.
