EY survey says investors back Ireland despite wider risks

Some 66% of international investors surveyed by EY plan to establish or expand operations in Ireland over the next 12 months, up from 54% across Europe.

The survey of 150 foreign direct investment decision-makers also found that 62% expect Ireland's attractiveness to improve over the next three years, indicating continued confidence despite broader volatility in global investment markets.

Ireland attracted 75 foreign direct investment projects last year, according to data cited in the survey, which tracks cross-border investments that lead to new facilities and job creation across 47 countries.

R&D shift

A notable change in the investment mix is the rise in research and development activity. R&D projects accounted for 25% of all FDI into Ireland in 2025, up from 12% in 2022.

That was the highest share in Europe, while only five countries attracted more R&D projects in absolute terms. The increase came as R&D projects across Europe fell by 30%, underlining Ireland's relative resilience in this part of the market.

Almost one-third of organisations planning to invest in Ireland in the coming year said they intend to direct that investment towards R&D. More than half, or 51%, identified enhanced tax credits as an important factor in sustaining that trend.

The survey highlighted Ireland's revised R&D tax credit regime, including the 35% rate introduced in Budget 2026. Investors also cited Ireland's position within the European Union, market access, workforce quality, and cultural and linguistic ties to North America among the reasons for continued interest.

"Ireland's key strengths as an investment destination remain our high-quality talent pool, competitive tax regime and deep cultural and social ties with North America, none of which should ever be taken for granted. It is very positive to see that R&D projects were both a significant success for Ireland in 2025 and an area that investors remain positive about for the coming years. Innovation incentives are becoming a defining factor in attracting FDI and, as AI accelerates innovation, the countries that offer competitive incentives for investing in R&D, and connect research to real-world impact most effectively, will be better positioned to capture the next waves of investment.However, investors are also pointing to the challenges associated with the country's infrastructure deficit, and sustained momentum on the delivery of the National Development Plan to address these will be key," said Feargal de Freine, Head of FDI at EY Ireland.

Pressure points

Despite the positive outlook, investors highlighted several constraints on Ireland's competitiveness. Infrastructure was identified as the biggest risk to future attractiveness by 33% of respondents, followed by energy and labour costs at 31%.

When asked where Ireland should focus its efforts, 42% named investment in transport, energy, water and housing as the top policy priority. That compares with 15% who gave the same response two years earlier, showing a sharp rise in concern over basic capacity and cost issues.

Carol Murphy, Head of Markets at EY Ireland, said: "Talent remains central to Ireland's FDI story. As AI reshapes every sector and skills grow scarcer worldwide, the countries that invest fastest in AI capability will win the race for investment. Ireland already has a strong collaborative ecosystem between education, government and business. The job now is to continue to build faster and responsibly on this, because the future won't wait."

Northern Ireland

The figures also showed stronger foreign investment activity in Northern Ireland. The region secured 28 FDI projects in 2025, up from 17 in 2024, an increase of 65%.

Software and IT services accounted for nine of those projects, while business services contributed eight. The pattern reflects continued investor interest in digital and services-led sectors even as overall European investment activity has weakened.

Nearly half of Northern Ireland's projects last year came from US investors, according to the survey findings. The report said the region's performance stood out against a backdrop of softer FDI flows across Europe.

"Northern Ireland's performance this year stands out in what is an increasingly competitive and selective global investment environment. While overall FDI levels have softened across Europe, the projects that are coming through are more focused, more strategic, and increasingly concentrated in areas such as technology and business services, where Northern Ireland is proving it can compete. What is particularly encouraging is how closely private investment aligns with the region's overall direction. Ongoing investment through City and Growth Deals, together with a focus on innovation, skills and high-growth sectors, is helping to strengthen Northern Ireland's long-term appeal and create the conditions for more high-value investment, with almost half of all projects last year coming from US investors," Andrew Dolliver, Strategy and Transactions Partner at EY UK & Ireland, said.