Monday 20 May 2019

Man who spotted the 'Celtic Tiger' still optimistic

Kevin Gardiner, HSBC economist, addressing a business briefing, hosted by HSBC Corporate Banking Ireland, on the new Single Euro
Payments Area
Kevin Gardiner, HSBC economist, addressing a business briefing, hosted by HSBC Corporate Banking Ireland, on the new Single Euro Payments Area

John Mulligan

HSBC's head of global equity strategy believes Ireland is in a strong position to weather the current bout of economic malaise and that the Government should not be afraid to temporarily breach EU deficit ceilings in order to borrow money to continue investment in major infrastructural products.

Kevin Gardiner, who's credited with coining the phrase 'Celtic Tiger', in 1994, to describe Ireland's then impending stellar growth levels, conceded yesterday that Irish investors were in the "teeth of a gale", and that the ISEQs weighting towards financial and construction stocks had a particularly negative impact.

"But the reality for Irish people is that income levels have gone up over the past decade," said Mr Gardiner.

"The Tiger's roar may be over, but a more prosperous country arguably has less need for it."

Mr Gardiner also said that Irish house prices were likely to drift lower and would not turn around any time soon. He said that despite the falls in prices, property was still trading at values way above historic levels.


Ratings agency Standard & Poor's said yesterday that it believed Ireland's house prices would probably bottom out in about six months' time, but noted that the pace of decline showed few signs of faltering.

Mr Gardiner added that he found it "slightly disappointing" that much commentary focused on Ireland's property market as a key economic driver in recent years, when low taxes and a liberal corporate regime played significant roles in bolstering growth.

This upcoming US presidential election in November sees the two candidates -- Barack Obama and John McCain -- propose very different corporate ideas.


Mr McCain is promising to slash the US corporate tax rate from 35pc to 25pc -- still way above Ireland's 12.5pc, but if his promise was seen through it could have the potential to stem company capital outflows from the United States.

Mr Obama has indicated that he might consider trimming US corporate tax rates too, but is also proposing to make it easier for unions to represent employees.

However, Mr Gardiner does not believe -- even if Mr McCain is elected and his tax cut introduced -- that Ireland would suffer unduly from any slowdown in foreign direct investment.

"US companies come to Ireland to use it as an entry to the EU. It's English-speaking, flexible, and very close from a business culture point of view to America," he said. "I'd be very surprised if you saw any significant drop in foreign direct investment (FDI) from the US, even if corporate tax rates there were cut. I don't particularly see Ireland losing out."

Mr Gardiner, who was speaking at a meeting in Dublin yesterday hosted by HSBC corporate banking, also said that plans to regulate oil futures trading in the US and elsewhere is likely to be unproductive in the longer term.

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