Ireland sure is a lovely country to visit, but many who do so find it very expensive. And they’re not alone.
People who live in Ireland are well aware that consumer goods and services in their country are significantly more expensive than the EU average.
There are very few countries in the European Union with higher costs of living.
So why is Ireland expensive? Several reasons might be at fault. Ireland is an island country, with relatively few citizens, which makes importing products more necessary and expensive. To an extent, taxes can also add to the expensiveness of certain goods and services in Ireland. In some parts of the country, the tourism industry can make things more expensive, as can the overall impression of Ireland being a wealthy country.
Knowing why a country is expensive is one thing. But if you’re planning a trip to Ireland, you should understand how expensive it is, and how you can have a more affordable stay in the country. You can learn that, and more, in this article.
How Expensive Is Ireland?
Before we start looking at reasons why Ireland is such an expensive country, maybe we should first figure out whether it’s expensive and how expensive it is. Surely someone coming from one of the world’s richest countries will find Ireland less expensive than someone coming from the developing world.
Ireland is a European country and a member of EU, so let’s see how it compares with other countries in Europe and the European Union. Eurostat, the European Commission’s agency in charge of statistics, calculates the price level index for household consumption every year. The index shows how expensive it is to live in a country compared to the average costs of living for the twenty-eight European members.
According to Eurostat’s data for 2017, the index for Ireland was 125.4. This number demonstrates that the prices for consumer goods and services in Ireland were 25.4% higher than the average in Europe. EU countries that were more expensive than Ireland were Denmark, Luxemburg, and Sweden.
When compared to all European countries, Ireland is still expensive. Out of the ten non-EU countries covered by Eurostat, only three were more expensive than Ireland. According to data, Ireland is the fourth most expensive country in the EU and the seventh most expensive in Europe. And Europe, in general, isn’t affordable. So yes, Ireland is an expensive place to live or visit.
People who live in the United States would think so, too. Among the many things Americans would find more expensive in Ireland are eating out, cigarettes, transportation, clothing, and rent. And to make things more confusing, the Irish have a lower average monthly net salary than Americans.
What Makes Ireland Such an Expensive Country?
So what gives? For every hundred euros, you’d spend in a country that is at or near the European average — Italy, for example — you’d have to spend a bit over a hundred and twenty-five euros in Ireland to get the same thing. There has to be a good reason for it.
The problem with figuring out what makes a country expensive is that you end up dealing with a multitude of factors which may or may not apply to specific products. For example, Ireland’s value-added tax, or VAT is roughly two percent higher than the average VAT in EU countries. That alone can be one of the causes why people visiting Ireland might find some of the prices higher. But is that the only reason? Probably not.
As we’ll soon see on the example of alcoholic beverages, the VAT isn’t the only tax a country can levy, and that further complicates the structure of prices in the country. And because Ireland has a total of four VAT bands, the VAT might not be the reason why certain products are more expensive in Ireland than in other countries.
At the same time, Ireland is a small market that’s relatively isolated and prosperous. And its first neighbor uses a different currency. Ireland might not be able to produce everything it needs, so it’s only natural it will import goods and services. But because of the costs of transport and small quantities, the prices of goods go up.
If the retailers can profit off the exchange rate, they will. All of the above probably plays a role in the costliness of industries dominated by international players, such as the apparel industry.
And as if all of this wasn’t enough, Ireland has a low level of public investment. The basic services, including transport, housing, and even childcare, are provided by the private sector. And the private sector is in it for the profit, not to keep Ireland affordable.
Why Is Alcohol So Expensive in Ireland?
Among the many things Ireland owes its worldwide fame to, high-quality alcoholic beverages have a special place. The whole world knows about Guinness, Bailey’s, and Irish whiskeys. People around the world know what Irish coffee is, and they love it. Irish cider isn’t half bad, as many people who’ve been to Ireland would attest. And they’ll also say that they found it surprisingly expensive.
We’ve already mentioned that arguably the main reason why alcohol is so expensive in Ireland is high taxes. But it’s not the regular taxes that are the main reason why a pint of Guinness costs less in Spain than in Ireland, for example. It’s the excise tax that is to blame.
To be perfectly fair, the excise tax isn’t technically a tax at all — it’s a duty or a tariff that’s imposed on certain kinds of products under certain circumstances. If you travel a lot, you are probably familiar with duty-free shops — a specific type of shops that sell products without the duty that would regularly be applied to the price of the product.
The goods where these taxes are usually applied are cigarettes, gasoline, and — alcoholic beverages. And those taxes wouldn’t raise the prices of alcohol by that much if they were the only taxes that are applied to alcoholic beverages. But they are not — they go on top of the standard VAT rates, which are 23% in Ireland.
According to data gathered by the Alcohol Beverage Foundation of Ireland, the country has the most expensive prices of alcohol in the EU — 75% above the EU average. In 2014, for every pint consumed in bars, around 30% of the price went to the exchequer. For off-license whiskey and wine, the percentage goes well above 60%.
Tips for the Budget Traveler to Ireland
Because tourism remains such an important contributor to Ireland’s economy, it’s safe to say that at least some of the tourists are finding ways to make their trip to Ireland more affordable. Here is a couple you can use on your next trip to Ireland:
- Dublin is the most expensive part of the country, so not focusing on it might save you money.
- Staying at the same hotel or B&B during your whole time in Ireland is probably less expensive than changing accommodation mid-stay.
- Go to places with no cover charge and avoid buying rounds.
- Stay away from the touristy areas as they tend to be expensive.
- Eat a big Irish breakfast, a small lunch, and an early dinner if you’re eating out.
- Walk in the cities whenever possible; otherwise, use public transportation.
- Choose free entertainment — the beautiful nature, the National Museum, and music in the pubs.
- The Heritage Card offers incredible value for money.
Is Ireland a rich country?
Ireland is a rich country. As of October 2018, Ireland’s GDP per capita was more than $77,000, which makes Ireland the second richest country in Europe and sixth in the world. But GDP per capita is not the only way to measure how rich a country is.
The average monthly salary in Ireland in 2017 was €2,464, the fifth highest in Europe. So the Irish are well off, but they are not the richest people in Europe. But even that is only half of the truth because a lot of people living in Ireland are not well off at all. In fact, almost 800,000 live below the poverty line — and the whole country has less than five million citizens.
Is Ireland a high-tax country?
Ireland is not a high-tax country overall. For example, low-income workers in Ireland have a very small tax burden when compared with other countries. High-income workers pay significantly more because Ireland’s tax system is progressive. The corporate tax rate is also low.
On the flipside, however, the progressive nature of Ireland’s income tax structure starts kicking in sooner than in countries like Germany or the UK. And not for nothing, but the Irish pay a higher standard VAT than the EU average.
Is Ireland cheaper than the UK?
Even though it depends from one case to the other, it’s safe to say that Ireland, in general, is more expensive than the UK.
For example, rents will probably be more expensive in London than in Dublin, or anywhere else in Ireland. But groceries are more expensive in Ireland, and even things like high-end eating out tend to be cheaper in the UK.