More than 40% of jobs in Ireland could be affected by artificial intelligence, the International Monetary Fund said in a preliminary staff assessment published on 25 May 2026. The IMF identified workers in information and communications technology, financial services and other knowledge intensive roles as particularly exposed and said capturing net productivity gains will depend on continuous reskilling and upskilling. Yan Sun, the IMF mission chief to Ireland, said the country is "well positioned" to benefit from AI but warned that without policies to help workers adapt some people could be left behind. The report pointed to Budget 2027 as the moment the government must set out how it will reconcile household supports with broader tax and spending choices.

The IMF parked a number that matters at the centre of its assessment: more than 40 percent. That's the share of Irish jobs its staff say could be affected by artificial intelligence, a far higher exposure than in most other advanced economies. The warning arrived in a preliminary staff assessment released on 25 May 2026 and threaded technical labour market mapping with fiscal and social policy advice.

The fund singled out information and communications technology, financial services and other knowledge intensive sectors as the most exposed to AI driven change. Those are the same sectors that anchor Ireland's multinational dominated export model and that account for a large slice of private sector payrolls. The IMF linked its vulnerability assessment to recent corporate moves: several technology employers in Ireland have announced job reductions while reallocating resources into cost savings and AI investment.

IMF mission chief to Ireland Yan Sun told reporters Ireland is "well positioned" to gain from AI. But she added a warning: without policies to help workers adapt, some people could be left behind and inclusive growth undermined. The staff report makes the mechanics explicit. Realising net productivity benefits won't happen automatically, it said. It will require persistent investment in training, policies that support labour mobility and a framework that enables workers to move from shrinking tasks to growing ones.

The fund also drew a line to financial stability. It said rapid advances in AI create novel risks for employment and for financial markets. One risk the report highlighted is the possibility of steep market corrections if multinational companies revise down their expectations for AI driven productivity gains. That's the sort of shock that could ripple through corporate earnings, asset prices and, tax receipts in a small open economy heavily dependent on a handful of large firms.

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Fiscal choices and social policy trade offs

On fiscal and structural policy the IMF urged targeted measures rather than broad based supports. The staff recommended strengthening expenditure controls, broadening the tax base and limiting the number of preferential VAT and excise rates.

It flagged Ireland's heavy reliance on a small number of multinational corporations as a continuing vulnerability, a point Yan Sun emphasised in comments accompanying the assessment.

The fund judged that a broadly neutral fiscal stance would be appropriate in the near and medium term while also supporting a planned scale up of public investment to close housing and infrastructure gaps. That recommendation sits awkwardly with choices already on the government calendar. The coalition intends to cut the hospitality VAT rate from 13.5 percent to 9 percent from July. The government’s own estimates put the cost of that cut at about €232 million in 2026 and €681 million in 2027. This IMF said that measure is inconsistent with the aim of keeping the number of reduced VAT rates limited.

The staff advised using excess corporation tax revenues to bolster savings funds and to make permanent spending more sustainable. It also offered social policy prescriptions. Instead of across the board tax cuts or universal subsidies, the IMF recommended temporary, targeted household supports to protect the most vulnerable. It suggested the social welfare system is the most effective channel to reach those households, and it said policies to enhance labour mobility, including more affordable housing, would help workers move between jobs and regions as labour demand shifts.

The assessment included a short macro forecast. The IMF expects domestic activity to slow, forecasting that the domestic economy will grow in 2026 at about half the rate of the prior year. Despite the slowdown, the fund expected only a slight increase in unemployment for 2026, reflecting the strength of Ireland's labour market and ongoing demand in parts of the economy.

There is a clear fiscal calendar marker in the report. Budget 2027 is the next concrete milestone the IMF cited.

That's when ministers will set out the government’s approach to household supports and how they intend to reconcile spending plans with the fund’s advice on broadening the tax base and tightening expenditure controls. The hospitality VAT cut is set to take effect in July 2026, so Budget 2027 will be the fiscal checkpoint where trade offs become unavoidable.

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Budget 2027 will be the test: ministers must decide whether to follow the IMF's call for targeted supports, tighter expenditure control and tax-base broadening, or to go ahead with measures such as the hospitality VAT cut the fund flagged as inconsistent with those aims. Originally reported by The Irish Times.

This article was created with AI assistance.