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Chapter 1: What is the main topic discussed in this episode?
Breakfast Business with Enterprise Ireland on Newstalk.
Well, if 2025 was a year of uncertainty about the Trump tariffs, 2026 is the year of heightened geopolitical volatility. That's the warning from EY Ireland, whose co-head of geopolitical strategy, Simon McAllister, joins me now. First, Simon, let's bring our listeners up to date on the merchandise exports from the first 10 months of the year. They're up 22% to €228 billion.
Of that, medical and pharma comprise 55% and exports to the US are up 75% so far this year. So what do we need to look out for next year?
I think what we can expect is more volatility. So certainly the numbers this year have been extremely noisy. So from quarter to quarter, there's big movements up and down in individual sectors.
Chapter 2: What geopolitical changes are expected in 2026?
Certainly at this point in the year, we can look at the year to date rather than the change quarter on quarter. And you've mentioned some of the big increases there. So we've seen big increases in pharma and medtech is probably the biggest one. A lot of that obviously driven by the dynamics in the U.S.,
But a lot of the other sectors have shown growth as well and important sectors to other parts of the economy like food and agri have grown year on year as well and services have grown as well, which obviously is a big contributor to the overall picture.
And around halfway through the report, I found this line, Simon. In 2026, the race to gain or retain access to critical minerals for digital technologies, high capacity batteries and defence system will lead to new productions and trade patterns. Can you delve into that a little bit more for us, please?
Yeah, so this is all about access to critical earths and minerals, which a lot of countries have realised are, you know, really, really essential to their overall economies. And in particular to the growth in data centres, which is driven by the growth in AI. And those critical earths and minerals are really important to a lot of the equipment that goes into data centres.
And countries want to have control over their data. They want to have control over things like AI tools.
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Chapter 3: How are merchandise exports performing this year?
And to do that, they need to have access to those minerals. But then it goes a lot wider beyond that as well, because those minerals go into a lot of really basic components that go into a lot of different products.
So everything from, you know, people talk about missiles and really exotic and complicated products, but all the way down to things like magnets, which go into a lot of different products. that realisation has been dawning. Those minerals are concentrated in very small number of countries.
Not all of them are countries that would be very stable politically or people that everyone wants to trade with. And then secondly, the processing of those minerals is very, very concentrated. So China really dominates the processing of that.
And that's because they've built a position over the last 20 years where they've been willing to take the very difficult environmental impact that comes with processing those to really dominate that position.
And of course, I should actually tell our listeners what report I'm referring to. And that is the 2026 Geostrategic Outlook. And it's available on the EY Ireland website. It's a really interesting read and a very visual one as well. You mentioned there about particularly the environmental decisions taken by China.
But if I was to look at the last couple of days, Simon, we saw in the EU in the past while Mertz and Macron having a bit of a standoff there regarding the use of the Russian frozen assets. The Draghi Report, of course, constantly being referred to in terms of European competitiveness.
Could you take us on a trip around the world in terms of the major regional blocs and talk about the geopolitical volatility that you see coming in the year ahead?
Yeah, so the way we set out our view and working with our global colleagues have done this, we have three big themes as to what's going to continue to happen next year. And what we call spheres of engagement is the third one. And that's around the fact that we're not seeing a consistent theme globally anymore.
And the previous few decades of globalization has really started to break down and we're seeing different dynamics in different parts of the world. Reverse globalisation, one might not call it. mostly driven by the US, but not just there.
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Chapter 4: What role do critical minerals play in global trade?
Because we now realise, you know, particularly driven by AI, the data is the lifeblood of every business.
And there I'm going to have to leave it. Thank you very much indeed, Simon McAllister, Co-Head of Geopolitical Strategy at EY Ireland.