End of Irish boom in sight?

Dublin has attracted many multinational companies

News that Gateway plans to cut jobs in Ireland is likely to raise fears that the Irish boom could start to fizzle out.

On their own, the 850 job losses in Ireland are a drop in the ocean in a country where unemployment hit a record low earlier this year.

What will trouble Irish policy makers is the fact that the boom has been driven by technology companies, such as Gateway, which have made Ireland their European base.

Gateway's cutbacks could be the first sign that technology companies - hit hard by the US slowdown - might now start to rethink their investment in Ireland.

Celtic tiger

The Irish economy is a European success story.

Since the mid-1990s, the economy has grown at an extraordinary rate, averaging about 8% a year.

Carefully-targeted European Union (EU) funding plus heavy inward investment - from the US in particular - are the principal reasons for the turnaround in the economy in the past decade.

This has seen Ireland become the world's biggest software exporter.

Not bad for a country which was once an unemployment blackspot, with a jobless rate close to 20%.

Jobs boom

Now, anyone who needs to get a job can - a boost in a country where generations of skilled workers emigrated to the UK and US to find work

Many new jobs have been created by multinational companies which have seen the country as an English-speaking gateway to the eurozone.

Companies have also been attracted by low corporate taxes, government incentives and a young, well-educated workforce.

Will they stay?

Irish politicians will argue that these reasons are strong enough to persuade companies to stay no matter what the economic climate.

The Irish Government insists that these firms have invested heavily in new manufacturing plants and offices and they are unlikely to abandon this investment lightly.

Ibec's Brendan McGinty points out that these foreign investors, which include companies such as Intel and Dell, have strong roots in Ireland now.

Gateway to future?

Some argue that Gateway's problems have less to do with the global slowdown and centre on its decision not to sell computers to order.

"I think in the long run Gateway will surely greatly regret cutting back on operations in Europe.... Right now, it is a fight to stay alive in Gateway," Cory Johnson, the Industry Standard's editor at large, told BBC World Service's World Business Report.

"There is no question that things are remarkably different in the computer industry," he said. "We are going to see single digit growth this year in the PC industry and that is remarkably bad. "