Foreign direct investment into Ireland is roaring ahead. The headline figures from the latest EY European Attractiveness Survey show just what a great run Ireland is on.
The country attracted 205 FDI investments in 2018, which was a staggering 52% increase on the previous year. Employment in IDA-backed companies is at record levels and unemployment has fallen in the country to around 5%.
What could possibly go wrong? Unfortunately there are lots of risks out there which could begin to undermine that clearly very strong position.
It is really only when you look closely at the figures, not just for Ireland but for FDI into Europe in general, that you identify potential problems.
We have benefited significantly from the Brexit debacle when it comes to FDI. The UK and Germany together account for one-third of all FDI into Europe. Germany reported fewer investments last year, as did the UK.
For the British it was a drop in the number of new manufacturing projects that caused the biggest problem. Brexit is potentially most disruptive for manufacturers who are thinking about expanding there. New manufacturing investments were down 35% in the UK. New HQs located in the UK halved from 98 to 48 and R&D projects were down 17%.
Germany on the other hand is becoming a victim of its own success. Capacity constraints, costs and labour shortages are seen as the main factors causing blips for the eurozone's biggest economy when it comes to FDI.
Ireland is not a centre for attracting manufacturing projects per se, but it has benefited strongly from financial services investment which is diverting out of London to Dublin or is coming to the IFSC instead of the British capital.
But before we go congratulating ourselves too much, the research shows how digital or tech projects accounted for much of the gain.
Ireland was fourth in Europe when it came to attracting digital investments. In 2009 we landed 21 new projects, but last year we hit 75. The UK saw a 4% decline in digital projects in 2018 and its overall market share of all European digital projects fell from 27% to 24%.
Despite Brexit, despite the uncertainty, the UK still attracted nearly one quarter of all digital FDI investments into the EU last year. Ireland recorded a massive 97% rise. Britain's Brexit is Ireland's opportunity here, but tough questions remain about the possible impact that changes to corporation tax might have in the future.
Equally, when it comes to FDI, the EY survey measures numbers of projects, which don't tell us about the value of those projects to the economy or the quality of jobs they bring.
Yet, surveys showing the value of FDI into Ireland don't really give a full picture either, because so many billions of it comes from registering IP here which may not lead to much new economic activity or jobs. The UK's Brexit pain may be Ireland's gain when it comes to Asian investment too. We are seeing a greater interest in FDI from China in particular. The EY research shows the largest shift in FDI project flow to the UK was from China last year.
British projects from China were down from 74 to 26. This wasn't necessarily a Europe-wide problem, because investments from China to France fell by just eight from 39 to 31. Germany landed 66 projects, down from 75.
Despite Ireland's very solid FDI performance, we are still seen as relatively small players when it comes to overall FDI into Europe. IDA Ireland has done a great job marketing our advantages, especially in the US. But it has to have the right product to sell.
Yet, serious questions have to be asked about our competitive edge into the future. The housing crisis and the cost of living are real competitive factors that are not going in the right direction.
Dublin's creaking infrastructure is another. The city area is growing at such a fast pace. This puts pressure on everything from schools and creche places to traffic jams.
But perhaps one of the biggest competitive factors to grab less publicity is third-level education. Without proper investment in our universities and colleges we will see a real drop-off in the future.