KPMG Ireland‘s recent reports provide critical updates on credit markets, mission-critical infrastructure, and fiscal performance. These insights, released amid persistent inflation and geopolitical tensions, now aim to offer guidance for businesses and policymakers as we enter 2026. Starting with credit markets, rising uncertainty is reshaping borrowing and lending landscapes.
Tighter monetary policies and elevated interest rates have led to stricter loan covenants and higher margin requirements, accelerating bankruptcies among strained businesses.
Key vulnerabilities include low-quality assets in private loans, a surge in securitization issuance driven by investor demand, and opaque disclosures that hinder due diligence.
Practices like double pledging of collateral and payment-in-kind deferrals signal borrower distress, increasing default risks.
High-yield and investment-grade default rates spiked from Q2 to Q3 2025, reflecting deteriorating economic expectations and slowing growth.
Small and medium enterprises (SMEs) are particularly hit by cashflow crunches from reduced consumer spending.
Forecasts point to continued market volatility, with inverted US Treasury yield curves indicating reluctance for long-term funding.
For asset managers, this demands robust risk assessments, including discounted cash flow valuations and recovery scenario testing to navigate higher premiums and a “flight to safety” toward treasuries.
Shifting to strategic infrastructure, the future of mission-critical facilities like data centers is increasingly power-constrained.
With annual capacity growth projected at 10% through 2030, driven by digital demands, power availability now dictates site selection, design, and investment.
Challenges include grid access delays of 5-8 years in regions like the UK and Ireland, leading to deferred revenues and costly redesigns.
Resilience strategies involve balancing redundancy options—such as dual power feeds, UPS systems, and diesel or gas generators—with carbon compliance and community concerns.
Emerging trends favor hybrid solutions like on-site gas plants, battery storage, and renewables, complicating technical and regulatory landscapes.
Contractor models are evolving toward M&E-led “GC2” arrangements, spurring mergers and acquisitions among firms like Dornan and Suir Engineering.
For organizations, integrating power risk modeling and grid strategies is essential to capitalize on growth while mitigating operational risks in hyperscale environments.
On the fiscal front, Ireland‘s December 2025 Exchequer returns reveal a record €105.7 billion in tax receipts, up €8.6 billion from 2024—the fifth straight year of growth and more than double the take from a decade ago.
Income tax rose 4.3% to €36.6 billion, fueled by a labor force of 2.82 million and wage hikes.
VAT remained strong amid consumer spending, while underlying corporation tax hit new highs, showcasing business resilience.
Capital Gains Tax surged 25% to €432 million more than 2024, though still below peaks at the prior 20% rate.
These figures underscore a robust economy, but the OECD’s Pillar Two global minimum tax, effective in 2026, is expected to add €3 billion via a 15% rate, introducing compliance complexities.
Suggestions include lowering the CGT rate to stimulate investment.
Collectively, these updates highlight interconnected challenges: credit tightness could strain infrastructure funding, while strong fiscal inflows provide buffers for strategic investments.
As uncertainty persists, proactive risk management and policy adaptation will be key to sustaining growth.
