Exporters to gain if the North lowers corporation tax
LOWER corporate tax rates in the North are "not a threat" to the Republic and could actually provide "opportunities" to our exporters, National Irish Bank (NIB) chief economist Ronnie O'Toole said yesterday.
The comments came as NIB released new research predicting that exports will rise by 7pc this year, while employment by foreign-owned companies will grow by 6,000 over the next two years.
Separate figures from Ernst & Young showed Ireland stormed ahead of Germany to record the biggest increase in foreign direct investment of any European country last year.
The number of new foreign direct investment projects increased by 36pc in Ireland last year, compared to 34pc in Germany and 14pc across Europe, Ernst & Young said.
Dr O'Toole said Ireland's low corporate tax rate was the "standout point" for attracting multinationals and insisted there would be "huge" implications if the Government increased the 12.5pc tax.
The North's corporate tax rate is currently at 26pc, but the six counties could soon be joining the low-tax club after an all-party committee at Westminster found there was evidence that lowering corporate tax would help the North's economy.
"We should keep a healthy eye on it but I think this is something we should not fear at all," Dr O'Toole told reporters yesterday.
NIB believes that Ireland's exports will grow over the coming years as the country takes advantage of the global economic recovery, while foreign direct investment will grow as Ireland's improved cost base attracts investors.
The 3,000 jobs that will be created in both 2011 and 2012 "won't put a dent" into the overall unemployment numbers of about 300,000, Dr O'Toole admitted, but he stressed that foreign investment provides other benefits.
Foreign companies create "upstream and downstream jobs" in the companies they buy from and sell to and a buoyant exporting economy can also "improve confidence" in Ireland's situation.
Asked about the investment impact of Ireland trying to restructure some of its sovereign debt, Dr O'Toole said we "shouldn't underestimate the reputational damage of that".
"We should be seen to be meeting all of our debts," he stressed.