Central Bank of Ireland Deputy Governor calls for policies to lift domestic investment sustainably over the next decade

The Central Bank of Ireland published a speech by Deputy Governor Vasileios Madouros arguing that Ireland needs to allocate a greater share of resources to domestic investment over the next decade to support key structural transitions including demographic ageing, geoeconomic fragmentation, the net zero transition and digitalisation. He noted the domestic economy, measured by modified national income (GNI*), is expected to have grown by around 4.8% in 2025 with unemployment around 5%, but emphasised downside risks from external shocks and increasingly binding supply-side constraints. The speech points to a post-crisis period of subdued investment, with investment contributing around 20% of potential output growth over the past decade, and highlights sectoral gaps in public infrastructure, housing and indigenous business investment. Housing output increased to around 36.5k new homes last year but remains below estimated underlying demand of 50-55k annually, while domestically owned firms invest about EUR 7,500 per employee, around 25% below the EU average, with the gap concentrated in knowledge-based capital such as research and development. On policy, Madouros stressed creating fiscal space and buffers, warning that planned average annual net spending growth of 6.7% in 2026-2030 and current spending growth of 5.9% risk reliance on potentially volatile excess corporate tax receipts and could add to inflationary pressures, alongside reforms to improve the efficiency and timeliness of investment delivery, stronger domestic business dynamism and more SME-friendly innovation policies, progress on EU Single Market integration and the Savings and Investment Union, and ensuring investment financing remains sustainable through the cycle.