AI expected to add €250bn to Ireland’s economy by 2035

Posted on: 13 March 2025

AI adoption in Ireland has surged to 91%, nearly doubling from 49% in 2024, a significant leap that now puts Ireland ahead of many of its EU counterparts after previously trailing behind, according to new research from Trinity Business School. 

Drawing on insights from 300 senior leaders across the island of Ireland, the AI Economy in Ireland 2025 report produced by Trinity Centre for Digital Business and Analytics (CDBA) in collaboration with Microsoft Ireland, provides a comprehensive view of the current rate of AI adoption. The report reveals AI's potential to contribute at least €250 billion to Ireland’s GDP by 2035. However, this could increase by a further €60bn depending on how businesses, government, and industry leaders harness AI’s capabilities and implement policies that foster responsible innovation.

The report provides an index comparing adoption rates from our 2024 findings, highlighting the acceleration of AI integration, along with insights into the evolving opportunities and challenges for AI advancement in Ireland.

"Ireland is at a pivotal moment in its AI adoption journey, and this year’s research underscores both the progress made and the work still to be done," said Dr. Ashish Kumar Jha, Associate Professor of Business Analytics at Trinity Business School and co-author of the report.

“AI adoption in Ireland has nearly doubled in the past year, but the challenge now is moving beyond experimentation to full-scale, strategic implementation. The opportunity is huge – AI has the potential to add at least €250 bn to Ireland’s economy (GDP) by 2035. Larger firms are leading the charge, while SMEs - which make up 99.8% of enterprises in Ireland - and the public sector risk falling behind due to barriers in expertise, investment, and structured deployment. For Ireland to fully realise AI’s economic potential, we must address barriers faced by SMEs and the public sector, focusing on governance, skills development, and strategic integration. The organisations that thrive will be those that integrate AI as a core strategic asset, investing in talent, governance, and innovation.”

The report highlights AI’s projected economic contribution to Ireland:

• AI adoption is projected to add at least €250 billion to Ireland’s economy (GDP) by 2035.
• Supportive AI policies and an enabling business environment could add an additional €60 billion by 2035.
• AI adoption is expected to increase Ireland’s Gross National Income (GNI) by at least €130 billion by 2035.
• With the right policies and widespread AI adoption, GNI could be up to €86 billion higher than in a baseline scenario.

On a per capita basis, Ireland’s GNI could rise to €160,000 per person with optimal AI adoption and policies - €30,000 higher than a non-AI baseline scenario.

“Increasingly recognised as a general-purpose technology, similar to electricity and the internet, AI is becoming a fundamental driver of economic growth, and this new report highlights its transformational impact on Ireland,” said Catherine Doyle, General Manager, Microsoft Ireland. “Ireland is uniquely positioned to capitalise on AI’s capabilities, thanks to its thriving tech ecosystem, skilled workforce, and forward-thinking government initiatives. With a collaborative approach across government, academia, and industry, Ireland can play a leading role in the era of AI, driving sustainable economic growth across sectors and setting the stage for global competitiveness as AI adoption continues to surge.”

Catherine Doyle Microsoft Ireland and Ashish Kumar Jha Centre for Digital Business and Analytics

AI Adoption & Governance Challenges

While the potential for AI to drive economic growth is clear, organisations still face significant challenges in adopting AI effectively. Despite growing recognition of AI’s value, with 50% of organisations (18% increase on 2024) believing AI will enhance productivity, only 8% of organisations have adopted an AI-first approach—integrating AI across all divisions.

A key issue appears to be the lack of formal strategy and governance frameworks, creating gaps in secure and responsible AI implementation. In line with the vision of a thriving, competitive AI ecosystem, about half of organisations do not yet have clear AI policies, hindering their ability to manage AI usage effectively. This challenge is compounded by the persistence of a "Shadow AI Culture," where employees independently adopt AI tools without the organisation’s oversight. Key findings that underscore this challenge include:

• 80% of organisations report employees using free AI tools without built-in enterprise security controls (45% in 2024), while enterprise-grade AI tool usage doubled (18% in 2024 to 42% in 2025).
• 61% of managers acknowledge AI usage even in workplaces where it is officially restricted (30% in 2024).

AI Adoption Across the Island of Ireland

The report also reveals significant differences in AI adoption across the island of Ireland, particularly in the public sector. These differences highlight both the challenges and opportunities that each region faces as they work toward more integrated AI systems.

• In Northern Ireland, 24% of public sector organisations use AI in all or most data-driven decision-making, compared to just 13% in Ireland. While Northern Ireland is ahead in adoption, its public sector AI usage is still relatively isolated and experimental.
• While AI usage has increased, organisations adopting an AI-first approach (integrating AI across all divisions) have grown more modestly, from 1.81% in 2024 to 8%. This suggests that businesses are integrating AI gradually rather than fully restructuring around it.
• Regulatory barriers are more pronounced in Northern Ireland, with 80% of organisations citing them as a barrier to AI adoption, compared to 50% in Ireland. Despite these hurdles, 63% of organisations in both regions feel that the government is supportive of AI adoption, with Ireland's sentiment slightly stronger, reflecting robust government backing for AI growth.
• In the private sector, the adoption gap between the two regions is minimal. However, Northern Ireland leads in the use of free AI tools, with 96% of managers reporting their use, compared to 75% in Ireland.

These regional comparisons underscore the challenges faced across the island of Ireland when integrating AI and highlight the ongoing need for structured policies and governance to support broader adoption.

SMEs and AI: A Growing Divide

Smaller businesses are facing their own set of hurdles in adopting AI. While larger multinational organisations lead in AI adoption, many SMEs are struggling to integrate AI into their operations. Key barriers include limited access to AI expertise, high costs, and uncertainty around implementation. If these challenges are not addressed, the gap between large firms and SMEs could slow AI's broader economic impact and deepen inequalities within the business community.

According to the report:

• 40% of SMEs in Ireland are actively using AI in some form, compared to 63% of multinationals.
• Only 10% of SMEs have an AI strategy in place, compared to 50% of multinationals.
• There is 30% less rate of AI adoption in SMEs compared to multinationals, largely due to limited expertise and cost concerns. (no change compared to last year)
• 62% of SMEs cite the lack of AI expertise as the top barrier to adoption.

Smaller organisations, especially those with revenues under €10M, tend to adopt AI as part of broader software packages rather than through integrated or standalone AI solutions. While last year only 30% of smaller organisations had adopted AI in any form, this number has now increased to over 50%, likely driven by the growing availability of AI-integrated software packages. However, despite this growth, there is still a notable gap in the adoption of formal AI strategies, with no small organisations reporting an "AI-first" policy, compared to more than 10% of larger organisations adopting such a strategy (up from 3% last year).

“The European Commission’s recent report on EU competitiveness highlights the importance of AI adoption within industries where we are already strong for maintaining a competitive edge,” continued Catherine Doyle. “While Ireland has the essential ingredients for AI success, we must recognise the challenges that businesses, especially SMEs, face in fully unlocking AI’s potential. At Microsoft, we are dedicated to equipping all businesses with the tools, skills, and strategies necessary to excel in the AI-driven economy. Overcoming barriers such as expertise gaps, cost constraints, and the need for innovative solutions is key. With targeted investments in AI education, scalable technologies, and strategic partnerships, we can ensure that the benefits of AI reach every corner of the economy, positioning Ireland as a global leader in AI innovation.”

The Talent Gap in AI

Workforce readiness is another critical factor that is impacting AI adoption, according to the research. Organisations, particularly those in the public sector, face significant challenges in developing an AI-ready workforce. One notable finding is that multinationals report greater ease in training staff for AI roles, with 70% stating their teams are skilled and easily trained in AI. This contrasts with just 55% of public sector organisations sharing the same view. However, several other factors contribute to workforce readiness challenges:

• Multinational organisations report lower investment in end-user AI training compared to domestic private organisations. However, they also perceive their staff as more skilled and easier to train - with 70% of multinational organisations expressing confidence in their workforce’s AI adaptability, compared to just 55% in the public sector.
• Recruitment remains a significant challenge, with 55% of multinationals, 47% domestic private and 53% public sector reporting difficulty in hiring AI-trained staff.
• Looking back at 2024 however, the proportion of managers reporting no major challenges in recruiting AI-trained staff has risen from 29% last year. This suggests that while talent shortages persist, the situation is gradually improving, potentially due to a combination of increased AI training efforts and a growing talent pool.
• Fewer than 40% of multinational organisations believe third-level graduates are adequately prepared for AI roles, underscoring the need for better alignment between education and industry.

As a result, there is a pressing need for increased investment in workforce training, as well as the updating of courses at third-level institutions to ensure graduates are equipped for the evolving AI landscape.

AI Governance and Readiness Gaps Between Public and Private Sectors

The report also highlights significant governance and AI adoption challenges, especially within the public sector, which continues to lag the private sector in AI integration. Key findings include:

• Only 10% of public sector organisations have a formal AI policy in place. A further 40% are in the process of developing one, leaving half without structured AI governance.
• 50% of multinationals have an AI policy or are actively developing one, significantly outpacing the public sector.
• Multinationals continue to lead AI adoption (63%), compared to 60% of domestic private organisations and 50% of public sector organisations.
• 30% of multinationals use AI in most or all decision-making roles, compared to only 15% in the public sector.
• 70% of domestic companies feel culturally ready for AI, while less than 50% of public sector organisations report the same readiness.

The report, The AI Economy in Ireland 2025: Trends, Impact & Opportunity, can be read on Trinity Business School website. 

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