Transaction Advisory Service Director, Garry O'Rourke at Ernst & Young Ireland said: "Along with the rest of Europe, Ireland benefited from overall growth in the software sector in 2007. The jobs created here are also high value R&D positions. However, the impact of the US economic downturn will not filter through until this year or next year, as many companies rethink their growth and investment plans."

Credit crunch and FDI

There has been no measurable impact of the credit crunch affecting the levels of foreign investment in 2007. "This was not a complete surprise," explained Nigel Wilcock. "Since companies plan foreign investment months in advance, FDI projects were already committed up until the later half of 2007, prior to the emergence of financial difficulties.

"Companies making a foreign investment decision will take market confidence into consideration as much as any other factor. The credit crunch will have caused potential investors for 2008 and 2009 to re-think or more likely, delay their plans to invest," he said.

Between 2000 and 2002 FDI into Europe declined by 15 per cent fuelled by a US economic down turn. The effect was particularly felt in the UK and Ireland, which were (and are) disproportionately reliant on US service sector investment, with a reduction of 36 per cent in FDI projects recorded over the two-year period in UK and 55 per cent reduction in Ireland.

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