Ibec paper stresses potential of digital economy

The value of Ireland’s digital economy has the potential to reach €21.4 billion by 2020, a more than fourfold increase in the space of a decade, a new report published on Monday has said. That figure would represent an estimated 7.9 per cent of GDP.

However, the document, The Future for the Digital Economy: Can Ireland take a Bigger Byte?, published by the business lobby Ibec, cautions against complacency in the sector, warning of "intense competition from rival economies".

Growth in the area has been substantial, rising from €4.3 billion in 2009 to €12.3 billion last year.

A forecasted increase to €21.4 billion in about four years would also have the capacity to create 56,000 jobs, the position paper claims.

Danny McCoy, Ibec chief executive, said digital concerns were “intrinsically linked” to the future performance of the Irish economy, with a current 6 per cent related GDP above the European norm of 5.7 per cent.

Tax reform

“We have attracted some of the world’s greatest high-tech companies and have a vibrant indigenous tech sector, but a successful digital economy needs to involve all parts of the economy and all regions.

“Tax reform is needed to encourage entrepreneurship and innovation. A failure to embrace new technology will quickly see Irish companies outmanoeuvred by competitors.”

The paper offers a number of key recommendations on exactly how to deliver such ambitious growth.

It calls for greater collaboration between government departments, State agencies, business and education to identify areas of opportunity.

It says reforming the work permit system, income tax and accommodation supply would help “attract mobile global talent”.

There are also calls for greater investment in developing “digital skills and education”, while stating unspecified rules around “planning and data” should enable the continued investment of the private sector in infrastructure, products and services.

Growing international competition is seen as a key threat. Ibec said Ireland needed to avoid any potential delay in the development of digital infrastructure.

Innovation

“At EU level we must work with our partners to complete the EU digital single market and ensure regulation supports digital innovation securely,” it said in a statement.

It also identifies a need for small enterprise to catch up with the progress of larger firms – 53 per cent of the latter have e-commerce sales accounting for half of total sales while the comparative figures for smaller companies are 28 per cent, accounting for 16 per cent of sales.

Alastair Blair, chairman of Ibec’s digital economy policy committee, said the digital sector had the potential to contribute significantly to domestic growth and foreign direct investment.

However, he said, investment in areas like education and supports for businesses were “critical” to realising that potential.