As Britain transitions to a new Labour government, Irish businesses will closely monitor the potential impacts, particularly since Britain is Ireland's closest neighbour. This is especially pertinent for Irish construction companies, many of which operate in both jurisdictions and could be significantly affected by changes in economic policy. Additionally, sectors like hospitality and retail may feel the ripple effects of Labour’s policies, especially regarding employment rights and consumer spending power, which are closely linked to broader economic conditions.
Construction Sector
The construction sector in Ireland is paying close attention to developments in Britain, especially given the number of Irish construction companies operating in both jurisdictions. However, Ireland is also seeing significant developments of its own. Large infrastructure projects are planned here, with some already funded via the UK. Substantial spending is expected, particularly in rail. This has attracted the attention of UK-based construction companies, including some that were initially Irish-founded.
Vivian Nathan comments, “We are currently working with several UK companies interested in the Irish infrastructure spend, particularly in rail. Additionally, we've seen increased inquiries from UK labour companies looking to serve the Irish market, indicating a growing interest in cross-border opportunities.”
“We are currently working with several UK companies interested in the Irish infrastructure spend, particularly in rail. Additionally, we've seen increased inquiries from UK labour companies looking to serve the Irish market, indicating a growing interest in cross-border opportunities.”
The UK has been hampered by delays in decision-making before the General Election and the collapse of several construction contractors. Cancelling large parts of the HS2 project has further pushed UK contractors to seek opportunities in Ireland, particularly with the Irish government's commitment to significant infrastructure spending.
Meanwhile, the Irish housing market remains buoyant, where demand continues to outstrip supply. However, local issues around capacity and planning present ongoing challenges for the construction sector in Ireland. Vivian notes that Irish-origin construction businesses are actively tendering for work in Ireland, further highlighting the cross-border interest.
Hospitality and Retail Sectors
Ireland’s hospitality and retail sectors have faced significant challenges since the COVID-19 pandemic. Despite seeing increased demand, the hospitality industry has recently been rocked by issues affecting prominent businesses, such as those involving Dylan McGrath and the Press Up Group. These sectors are particularly sensitive to broader economic factors like inflation and interest rates, both of which are influenced by the economic situation in Britain.
Vivian continued, “Labour’s focus on enhancing employment rights in Britain, including potential increases in the National Minimum Wage (NMW) and National Living Wage (NLW), could indirectly affect Irish businesses, especially those operating in both jurisdictions. The proposed Employment Rights Bill, which aims to ‘make work pay,’ may introduce measures such as banning zero-hour contracts and extending parental and sick leave. These changes could increase operational costs for businesses, potentially leading to higher consumer prices, particularly in the North of Ireland, where the border economy is acutely sensitive to changes in British policy.”
So, What Does This Mean For Irish Businesses?
The change in government in Britain brings with it a level of economic uncertainty that is of particular concern to Ireland, given our close ties, shared border, and the fact that some Irish and UK businesses operate in both jurisdictions. While it remains to be seen if the UK Labour government will adopt a ‘tax and spend’ approach, particularly in changes to the non-domiciled regime that could make Ireland a more attractive base, the full implications of Labour’s policies remain unclear. What is clear is that key sectors in Ireland—particularly construction, hospitality, and retail—will need to stay informed and prepared. The changes in Britain could have significant consequences for Ireland, making it essential for Irish businesses to monitor developments and adapt accordingly closely.
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