Tuesday 23 January 2018

Hard Brexit and Trump tax reforms are the main threats to Ireland - Moody's

Moody's believe FDI is key for Ireland. Photo: Bloomberg
Moody's believe FDI is key for Ireland. Photo: Bloomberg

Sean Duffy

A hard Brexit and reforms to US corporation tax policy are the main threats to the Irish economy, according to ratings agency Moody’s.

The agency said that Brexit has the potential to inflict more disruption here then had been previously anticipated.

Moody’s said that the attraction of foreign direct investment could serve to mitigate the adverse effects of Brexit, however the agency said that potential changes to US tax codes for multinationals could harm Ireland’s public finances.

Having revised their forecast for the Irish economy down to 3.1pc for this year in the wake of Brexit, Moody’s said it expects the same rate of growth in 2018.

Moody's said that long-established supply chains between Ireland and the UK were under threat. The agency noted that such disruptions would likely have a greater impact on small indigenous companies that are predominantly based outside Dublin.

The report added that it was "less concerned" about the European Commission's plans for common tax base for multinationals known as CCCTB. It stated the need for unanimity under EU law meant that the proposals were unlikely to adapted.

The importance of the multinational companies to Ireland was stressed in the report, with concerns about US tax reforms cited as a possible hazard for the Irish economic model. Around 15pc of Ireland's annual tax take comes from the sector.

Moody's said that while most of the multinationals based here were likely to continue operations, Donald Trump's plans to change the tax code in the US may stymie future investment from companies.

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