Irish financial offering isn't geared up to reap a Brexit benefit, conference told
Published 20/05/2016 | 02:30
Ireland needs to ramp up its offering in terms of tax, education and the infrastructure around financial services to attract investment in the event of a Brexit, a conference heard yesterday.
A British withdrawal from the EU will present opportunities for Ireland, Susan Dargan, the head of Financial Services Ireland (FSI), told the conference, organised by the Institute of International and European Affairs (IIEA).
But she stressed any benefit would be outweighed by the market uncertainty, damage to trade and impact on the free movement of goods and people that a Brexit would spark.
"We don't think that a Brexit has been priced into the market at this stage," Ms Dargan said.
"There is stronger than usual international investor flows into UK equities and bonds, and that might be because FTSE companies do not rely fully on the UK market itself. But we've also seen that currency hedging is at over 50pc, and that's the first time that we've seen that since we started to monitor this in 1999."
Asked by Pat McArdle, former Ulster Bank chief economist, if Dublin's IFSC has the capacity to take companies that may relocate here, including housing for their employees and office space, Ms Dargan said the infrastructure is there, but needs to "significantly ramp up".
"FSI has introduced an apprenticeship programme more recently with NCI," she said. "We're talking about 1,000 people going through that over a number of years. You would have to ramp up that type of activity significantly.
"You would have to have an environment that would be conducive to relocating to Ireland as well, and that covers tax, education and the regulatory environment."
Other speakers at the packed conference in Dublin's Aviva Stadium included Foreign Affairs Minister Charlie Flanagan, Peter Sutherland, a former European Commissioner for Competition and founding director general of the World Trade Organisation, AIB chairman Richard Pym, and chairman of Old Mutual Patrick O'Sullivan. All the speakers were in favour of the UK remaining in the EU, with no voices present representing the 'leave' side or advocating a withdrawal.
Mr Sutherland said Ireland needs to remain strongly committed to the EU if the UK withdraws, despite the close ties between the two countries.
"I hope our policy of favouring ongoing European integration remains part of what we believe in," he said. "If that means on occasion saying uncomfortable things to our great friends in the United Kingdom, or taking positions which are not the same as theirs, then we must do it. We must not resile from a commitment which is vital to the future of our country, which is Europe."
Mr Sutherland said the negotiation period between the EU and UK in the event of a Brexit could take "significantly in excess of five years". rather than the two-year period allowed under current EU rules.
The former Commissioner said it will be impossible from Britain's point of view to ditch the requirement to allow free movement of people or to make financial contributions to the EU.
Earlier, John McGrane. Director General of the British-Irish Chamber of Commerce, said that 16pc of FDI exports from Ireland go to the UK, but that rises to 44pc for home-grown firms.
"This is extraordinarily serious for Ireland," he said.
BDO chairman and former Ryanair chief financial officer Howard Millar said the 'leave' campaign in the EU was badly led, and he warned that there would be a mini-recession here as a result of the economic fallout from a potential Brexit.
Minister Flanagan said the priority of the Government is to ensure a "fully informed debate".
"There are a number of areas that would require detailed attention, not least the common travel area. It would require a detailed concentration on the part of a range of government departments here," he said.
"But our focus, and our concentration, is on ensuring that Irish people would be voting in Britain and 120,000 British citizens who live in the Republic of Ireland... and they would exercise their vote in the best interests of the very positive and constructive relations between the UK and Ireland."
Ministers intend to lobby the Irish community at events in Britain, with Minister Flanagan due to visit Liverpool and Manchester in early June. He will be in Derry and Belfast next week.