Thursday 29 September 2016

Cautious Ireland risks being outflanked in the war for post-Brexit jobs

Published 09/07/2016 | 02:30

IDA Ireland chief Martin Shanahan Photo: Mark Condren
IDA Ireland chief Martin Shanahan Photo: Mark Condren

The past week has thrown up new and significant threats to the prospect of Ireland capitalising on Brexit. There had initially been hope of winning jobs and investment displaced in the wake of Britain's vote to leave the European Union.

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But rivals have moved fast to improve their investment offering to business, and Ireland now runs a real risk of being left behind, partly for fear of causing offence ahead of what promise to be gruelling Brexit negotiations.

There are no such concerns in France, which launched a lightning offensive on Wednesday to lure City of London financiers to La Defence, the financial district on the edge of Paris.

With an un-Gallic lack of subtlety France's Socialist Prime Minister Manuel Valls grabbed business headlines by turning up to a banking conference promising sweeteners including favourable tax treatment for millionaire bankers, fast tracking of licences for firms, and a general rolling out of the red carpet to win investment from Britain.

It is a stunning reversal for the French, overturning successive administrations' squeamishness about the Anglo-Saxon world of trans-global capitalism and risking alienating not just Britain but other EU members. For Paris, the prospects of getting one over on the Brits, and the prize of emerging as Europe's financial powerhouse, will apparently trump all.

Meanwhile, British Chancellor George Osborne also moved with remarkable speed to shore up investment, promising to cut business tax and again seizing global headlines.

Austria and Spain are already fighting to house EU institutions which will have to leave the UK whenever the country finally triggers Article 50, and moves to formally exit the Union.

The speed, single-mindedness, even shamelessness, of some of the moves seen from member states to pick over the corpse of Britain's EU membership has been stunning.

By comparison Ireland has been slow to respond. Agencies like the IDA, Enterprise Ireland and Bord Bia have upped their marketing and advisory efforts, but - unlike France and Britain - the machinery of State here has yet to come up with a knock-out policy initiative to strengthen those agencies' hand.

Senior officials insist there is good reason for that. Ours is by far the most sensitive relationship to Britain of any EU member. From trade to the peace process, to citizenship and the common travel area, our ties make it trickier for Ireland to be seen plundering the corpse of British EU membership, goes the thinking.

The view from Government Buildings is that a country about to embark on what promise to be multi-year negotiations with upwards of 30 significant players - including the other 27 EU members, the Commission, and the main Northern Ireland parties, cannot afford to make enemies.

It's not an unreasonable view, but it creates its own risk of allowing our rivals to establish unfavourable "facts on the ground" even before the real talks get underway.

If France benefits from London being outside the single market, for example, it makes it harder to reconcile that country to our goal of maintaining stability, post-Brexit, by keeping the UK inside the market.

The Irish wish not to rock British or EU boats risks lending itself a bit too comfortably to a policy of doing nothing.

It doesn't explain diplomatic blunders, like the botched all-island Brexit forum that was blown out of the water by Northern Ireland first minister Arlene Foster before it ever got started, or the embarrassing exclusion of Ireland from a high-profile meeting of Europe's six "founding member" finance ministers immediately after the British result became known.

Inertia hasn't been the universal response, in fairness. IDA boss Martin Shanahan cut short a working visit to the US to be on the ground in Ireland when the result of the Brexit vote came in.

It meant the IDA was in action within hours of the result, pushing the message that Ireland remained open for business to prospective investors spooked by the British referendum.

In theory the British vote hands Ireland a golden opportunity. The UK is by far the biggest magnet for foreign direct investment in the EU. Uncertainty about access to the single market puts a major question mark over that. Brexit also raises a real threat to investment already in the UK, especially the so-called City of London.

In the past two weeks the IDA has targeted its message at financial firms that already have a presence here, and are therefore more likely to bulk up here if they slim down in Britain.

Keen to avoid a French-style full frontal assault on the UK, the IDA efforts will instead focus on US headquartered banks and investment firms.

It sounds like being the perfect storm for Ireland, leaving a windfall of jobs and investment.

We shouldn't fool ourselves. Fresh wins for the IDA will only offset the wider economic impact of the Brexit vote. Britain is our biggest trading partner - accounting for about 13pc of exports by multinationals based here, and a higher share of indigenous output.

In some sectors, including construction supplies, packaging, and food and drink, the UK is by far the dominant market for Irish products.

Front line agencies, such as Enterprise Ireland, are working with businesses to help contain the fallout. The collapse in Sterling is hammering exporters. Overnight, Britain has gained a competitive edge and unfortunately there is simply no quick fix to counter it.

Irish Independent

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