Q&A: Pot of gold or more Leprechaun Economics?

Q: Is the economy growing by 7pc?

A: On paper, yes, but in reality the data exagerates the extent of growth. There’s long been a debate about the veracity of GDP data in the Irish context, thanks to the multinational sector. That came to a head last year when data for 2015 showed the economy expanded by a massive 26pc. It clearly didn’t. The data was skewed by the accounting activities of international companies here. There’s a bit of that going on here too, albeit to a much lesser degree. That’s why the CSO came up with a new measure of the economy, known as GNI that strips out the volatile effects of the multinational sector. Economists also say employment and consumer demand are much more reliable measurements than GDP.

Q: So what is the true picture?

A: The domestic economy is growing, but experts dismiss the 7pc figure, saying 4pc is more realistic. But the data released by the CSO shows that domestic demand grew by 1.9pc in the third quarter compared with the previous quarter. In year-onyear terms, the figure was 2.7pc growth. Unemployment is heading in the right direction. The jobless rate for last month was 6.1pc, down from 7.5pc in November last year.

It is expected to dip below 5.5pc by the end of next year, according to the ESRI. So there are clear signs that the domestic economy is going strong.

Q: How much of an impact do multinationals have?

A: That’s hard to say. The open nature of our economy means it’s highly exposed to globalisation, and accounting by big international companies. Those moves can hugely distort the performance on paper of the economy, and make it seem like it’s doing much better, and is much bigger, than it is. Even with its distorting effect, though, the multinationals are big contributors to the tax take. The top 10 companies as measured by tax paid, thought to include firms like Microsoft and Google, accounted for 37pc of the overall net CT take last year, down from 41pc in 2015.