Speech by Minister for Finance, Paschal Donohoe, TD at State Street Ireland Market Insights Forum 2025

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INTRODUCTION

Good morning, everybody,

I am delighted to stand before you today. I would like to thank Terri and State Street for giving me the opportunity to address the diverse audience that is assembled here this morning.

The theme of my remarks today will be co-operation – what we can achieve when government and industry work together; how we have worked together in the past; and how we must continue to collaborate in the future. Events, such as today’s, give us the opportunity to strengthen these relationships and, perhaps more importantly, they allow us to reflect on our shared accomplishments to date.

IRELAND FOR FINANCE STRATEGY

The Ireland for Finance Strategy is an apt place to start as it serves as our primary vehicle for engagement and collaboration between public and private sectors on international financial services.

As most of you will be aware, Ireland for Finance is the whole of Government strategy for the development of the international financial services sector, combining private sector participation and public sector coordination.

The overarching framework sets the direction for how Ireland views its role in international financial services, and how we intend to support growth, innovation and resilience.

When the first iteration of the strategy was published in 2015, 35,500 people were employed in Ireland’s international financial services sector. As the current strategy draws to a close, the sector employs in excess of 60,000 people – a 70 percent increase.

It is no exaggeration to state that the growth of our international financial services sector has been one of Ireland’s greatest policy success stories.

When the current iteration of the strategy was launched in 2019, it set out an ambitious goal: to make Ireland a global leader in sustainable and innovative financial services, and to ensure that growth in this sector would be inclusive and regionally balanced.

The strategy has delivered - it has created jobs, driven innovation, strengthened regional growth, promoted diversity, and made sustainability a central pillar of our financial future.

In updating the strategy for the period 2026 to 2030, my Department launched a public consultation during the summer seeking the views of stakeholders on the current IFS landscape and emerging trends.

Officials are currently reviewing over 50 submissions received and have separately engaged with 100 stakeholders across the ecosystem to date, both in Ireland and abroad. Some common topics have emerged from this engagement to date including Ireland’s competitiveness, simplification of regulations and taxation.

Looking forward to 2030, there is a need for ambition and for new ways of building on Ireland’s current success. This may include shifting our focus to the proportion of high-value jobs held in Ireland and to ensuring the message of international financial services opportunity in Ireland has strong global reach and engagement.

The objective is to develop a comprehensive strategy which includes targeted, evidence-based and agile policy measures designed to enhance Ireland’s international competitiveness and foster sustainable growth.

SAVINGS AND INVESTMENT UNION

The EU’s Savings and Investment Union – or SIU – is a major EU initiative which is currently informing the work of my Department, including the development of the Ireland for Finance Strategy. The SIU is broad in scope, touching on all aspects of financial services and beyond, and high in ambition.

Ireland has been a strong supporter of the SIU from the outset. In my role as President of the Eurogroup, I am taking an active role in gathering political momentum behind the SIU. However, political drive alone will not be sufficient. As I and many others have noted, progressing the SIU will depend on both top-down and bottom-up actions, driven by Brussels and capitals respectively.

While aspects of the SIU may be challenging, requiring the buy-in of the authorities, stakeholders and citizens, I believe that the opportunities that it will bring for our citizens, our businesses and our economies will justify the effort.

It is important that we embrace all the possibilities that SIU offers. The Government is committed to working closely with the financial services sector and with our citizens to ensure that we can all reap the benefits.

The SIU has heralded a particularly active period for financial services in Brussels, with the launch of several important legislative and non-legislative proposals. We are currently engaged in Council working party negotiations on the Commission’s proposal to review the EU’s securitisation framework.

At the end of September, the Commission published its non-legislative package to boost retail investment – made up of a recommended blueprint for a Savings and Investment Account and a communication on financial literacy.

Tomorrow we are expecting to see the publication of the Commission’s review of the SFDR [Sustainable Finance Disclosure Regulation], a legislative proposal on IORPS [Institutions for Occupational Retirement Provision] and PEPPs [Pan-European Personal Pension Products], as well as recommendations on auto-enrolment, pension tracking systems and pension dashboards.

FUNDS REVIEW

In relation to the Commission’s recent recommendation for a Savings and Investment Account, I would like to address the topic of retail investment. As you may all be aware, Ireland does not currently have a specific investment account for retail investors. However, the tax treatment of retail investments was considered as part of a broader review into the funds sector in Ireland, which was carried out by my Department last year.

We have already begun to take steps to address some of the barriers identified in the Report. As part of the Budget package earlier this month, I announced a reduction to the rate of tax applying to investments in funds and life assurance policies from 41 percent to 38 percent.

This will be followed by a roadmap to be published early next year, setting out the intended approach to simplify and adapt the tax framework to encourage retail investment.

This roadmap will be informed, not only by the Commission’s account blueprint, but also by a Savings and Investments forum to be convened in early 2026, bringing together public and private stakeholders interested in this area.

In total, the Funds 2030 Report contained over 40 recommendations that addressed the most material issues raised by industry during the course of the review.

As per the Implementation Plan published last month, thirty-one of the recommendations are either complete, on a path to completion or in progress.

This includes a measure to legislate for a Dividend Withholding Tax exemption for Investment Limited Partnerships or “ILPs” and equivalent EU/EEA funds, which is part of the Finance Bill that is currently making its way through the Oireachtas.

My officials have consulted extensively with industry, both in the context of the Funds Review and on more discrete pieces as work such as the DWT exemption for ILPs.

I believe that this consistent and meaningful engagement demonstrates the continued commitment of Government to support the funds and asset management industry in Ireland and to cement our position as a desirable location for regulated investment funds.

These tax changes have been accompanied by the Central Bank of Ireland’s work to review its AIF Rulebook to support the growth of private assets.

This work was supported by a formal public consultation process which closed a couple of weeks ago. The proposed amendments are a significant enhancement to Ireland’s regulatory framework for AIFs. These changes, together with the measure in the Finance Bill and the transposition of AIFMD, will serve to make Ireland a more attractive location for private assets.

Before moving away from Funds 2030, I would like to make some short remarks on tokenisation. A clear theme which emerged from responses to the Funds Review consultation was the importance of maximising the synergies offered by Ireland’s position as an international financial services centre, as the European headquarters for many global technology firms and as a thriving location for FinTech.

We are already seeing how the deployment of AI can actively shape the future of financial services, including the funds and asset management sector.

While other technologies, such as distributed ledger technology (DLT), are still comparatively nascent, momentum seems to be gathering pace. Just last month we saw the announcement of the tokenisation of an Irish-domiciled UCITS Money Market Fund.

I am aware that industry groups have been engaging with the Central Bank and my officials in the Department of Finance on how to make progress in this area. I fully support and encourage the work that industry has undertaken to assess what can be done within the current legislative and regulatory frameworks. I also acknowledge that ongoing co-operation with the authorities will be key as we move forward.

GEOPOLITICS

No speech today would be complete without acknowledging the wider geopolitical context. Over the last ten months, Europe has been faced with a world in which we have fewer reliable international partners. This is the reality which we must adapt to.

Although the global economy that we operate in has continued to evolve, Europe has been steadfast in standing for a stable budgetary framework, predictability of rules and regulations, and openness in trading relations.

While a steady rate of growth in economic activity is forecast into next year, we must remain vigilant against the threats posed by uncertainty in international trade and the geopolitical environment. We cannot ignore the very real demands on expenditure that these geopolitical conditions have created.

From a domestic perspective, this year has seen significant shifts in the global economic landscape, most notably with the deeply regrettable introduction of widespread tariffs.

Indeed, given the highly globalised nature of Ireland’s economy, tariffs represent a clear headwind to domestic activity, with implications for future waves of investment and job creation, all while weighing on global growth.

That said, the recent EU-US trade agreement provides a welcome level of certainty for Irish exporters whose goods will now not face a tariff rate higher than 15 percent.

I cannot stress this enough - Ireland remains committed to free trade and the multilateral cooperation which has enabled so much growth and progress in recent decades.

However, we must now look ahead and consider how we adapt to the new international landscape we are facing. Fortunately, the economy is in a relatively strong position at present, despite the wave of successive shocks experienced in recent years.

Indeed, the number of people in employment in Ireland is at record levels, and the unemployment rate is broadly consistent with ‘full employment’. At the same time, inflation has now retreated to more normal levels, supporting real incomes.

The Irish Government is firmly committed to supporting the continued resilience of the economy as we adjust to a new global trading environment.

The significant investment set out in the National Development Plan will help to ensure that Ireland remains a competitive place in which to invest; something that was also a key focus of last month’s Budget.

Careful management of the public finances, including through continued transfers to the two long-term savings funds, will also put us in the best possible position to respond to future challenges and shocks.

CONCLUSION

Ireland’s financial sector continues to play a vital role, not just within our own economy but within Europe’s broader financial landscape. We are operating in a world defined by change – geopolitical realignments, rapid technological development and evolving investor expectations. Against that backdrop, Europe’s ambition to create a genuine Savings and Investment Union takes on real significance.

State Street has been active in Ireland for almost 30 years. As a major service provider, providing a strong and reliable infrastructure that investors can rely on, you have been an important building block in growing Ireland’s attractiveness as a funds domicile. I would like to thank Terri and all at State Street for inviting me to address you here today and wish you well for the remainder of the morning.

ENDS