Thursday 19 September 2019

Brexit is not the only threat to rattle financial services firms

Michael D’Arcy, Minister of State at the Department of Finance and the Department of Public Expenditure and Reform, met with a range of firms
Michael D’Arcy, Minister of State at the Department of Finance and the Department of Public Expenditure and Reform, met with a range of firms
Samantha McCaughren

Samantha McCaughren

Last February, I wrote about how larger Irish companies were working with advisers on a range of models to try to assess the impact of Brexit. The scenarios ranged from a benevolent exit to a no-deal crash-out. The no-deal outcome seemed like a terribly pessimistic view of the road ahead back then. Now those same companies are working on the assumption that the likelihood of a no-deal Brexit is tipping into well over 50pc.

While Brexit will be top of mind for Finance Minister Paschal Donohoe and his colleagues in the coming weeks, some documents released under Freedom of Information rules suggest that several other concerns are brewing among big businesses based here.

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Some of the top-line issues were covered in these pages last week, but the details of a meeting between Minister of State Michael D'Arcy and representatives from several prominent financial services companies reveal corporate dissatisfaction that is rarely aired in public.

The roundtable discussion was held under the Chatham House rule, which afforded some anonymity to the commentators. But the organiser, the German-Irish Chamber of Commerce, helpfully rounded up the views of its members in advance, to "avoid any surprises" on the day.

Yes, Brexit came up as a concern. And this was back in May, when the models for a no-deal Brexit were tucked away in the back of the filing cabinet. But it was not raised in quite the way Brexit worries have generally been aired to date.

With regards to financial services, most of the public narrative has been about the wins Brexit will bring to Ireland as companies relocate from the City of London. There has been little thought given to the impact this could all have on the companies based here already.

One firm attending the discussion expressed concern that there is already competition for limited resources, and questioned the capacity within the industry here.

It also raised questions about the possible "distraction" this would all cause the Central Bank. Then there was a detailed criticism of the country's wider strategy for Ireland's financial services.

An unnamed cross-border company trading in 11 countries and employing around 100 people was quite scathing about the Government's strategy of upskilling Irish workers for the sector.

Almost half (49pc) of its workforce is non-Irish, it explained. This is not because there aren't enough Irish people for the jobs. "The key reason we are here is access to skilled people with native languages from where we trade," it said.

According to that company, Dublin needs to make sure it remains attractive to that foreign talent.

Regardless of the Government's desire to promote other Irish cities, the firm claimed that these young people want to work in Dublin.

This company's main fear is not Brexit, but the other domestic issues which we've become all too familiar with over the past couple of years: the high cost of rent and living, as well as the "penal" personal tax rates.

Even if there is a pull-back from the high-stakes Brexit strategy currently being employed by British prime minister Boris Johnson, these are concerns that should not be ignored.

There was one other stinging complaint, which the documents released to me only touched on briefly. While the Apple tax deal has drawn the ire of the EU's Margrethe Vestager, little thought has been given to how other foreign direct investment firms have viewed the revelations.

While the Government and Apple have denied there was a special deal on tax, it has apparently left some international firms feeling a bit sore.

One participant in the roundtable discussion flagged fair tax treatment for all, "not just the large social media companies". It is perhaps unsurprising that some multinationals have been sickened to see the tax rates some of the tech giants have managed to engineer.

Ireland is likely to need as much support from the multinationals as it can get in the coming months and years.

Brexit may be dominating the business agenda in Merrion Street at the moment, but it seems there are quite a few other issues which need to be tended to.

Sunday Indo Business

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