The Central Bank of Ireland released a speech by Governor Gabriel Makhlouf and published his letter to Minister for Finance Paschal Donohoe setting out his views on the macro-financial environment, the financial services landscape and the Bank’s financial regulation priorities for 2025. Makhlouf argued that Ireland’s resilience must be strengthened amid geoeconomic fragmentation and wider transitions in climate, demography and technology, while stressing that the inflation outlook remains uncertain and that the European Central Bank’s Governing Council should not commit to any specific future path for interest rates. He highlighted two near-term challenges for Ireland: infrastructure deficits across housing, transport, energy, water and wastewater, and fiscal risks from reliance on a narrow tax base. Corporation tax was cited as 25 per cent of tax revenue, with over 90 per cent paid by foreign-owned firms, and only around one third (c.EUR 5bn) of the portion deemed “excess” from domestic economic activity being put aside; he warned that a substantial loss of this revenue could push the budget into deficit and constrain infrastructure plans. The speech also called for prioritising capital expenditure and broadening the tax base, structural reforms to reduce the costs of infrastructure delivery and improve construction productivity, measures to support labour force participation and skills adaptation, and EU action to reduce Single Market frictions and ensure competition frameworks keep pace with change including artificial intelligence. For the financial sector, he pointed to policy efforts to translate savings into investment, citing the need for the Savings and Investments Union to help mobilise the EUR 11.5 trillion held by Europeans in deposits and cash. For 2025, the Central Bank signalled it will work with peers and stakeholders on the simplification agenda and seek to enable properly functioning markets that support innovation and productivity without undermining financial stability or investor and consumer protection.
Central Bank of Ireland 2025-02-20
Central Bank of Ireland publishes Governor Makhlouf letter on 2025 regulation priorities and calls for investment-led economic resilience
The Central Bank of Ireland released a speech by Governor Gabriel Makhlouf on 2025 macro-financial priorities, emphasizing strengthening Ireland's resilience amid geoeconomic fragmentation and uncertain inflation. Challenges include infrastructure deficits and fiscal risks from a narrow tax base, with corporation tax heavily reliant on foreign-owned firms. The Bank aims to simplify regulations and enable markets that support innovation and productivity while maintaining financial stability and protection.