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Multinationals push State to top of euro growth table

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Ireland topped the eurozone's economic growth table in the final quarter of last year, although the single-currency bloc grew just 0.1pc and the figures here are inflated by huge flows from multinationals.

Data from Eurostat, released yesterday, showed the economy here grew by 1.8pc, the fastest pace, ahead of Malta's 1.7pc.

Irish data released last Friday showed a surge in inflows of intellectual property assets due to the impending closure of the 'double Irish' tax break, and the numbers are so large that they have a big impact on EU data.

Gross fixed capital formation in the euro area surged by 4.2pc in the quarter as a result of the flows into the State, mirroring a similar surge in the second quarter of last year when a company based in Singapore consolidated its tax operations here and shifted IP assets here.

Irish affiliates of US firms account for about 6pc of all US foreign affiliate sales, 5pc of all affiliates' value added and research and development, according to new research partly authored by Ronald Davies of University College Dublin and James Markusen of the University of Colorado.

"Irish affiliates' share of all affiliates' profits worldwide is 11pc, double Ireland's share of sales and value added, suggesting profit-shifting to this low-tax jurisdiction," said the study, which was published by the National Bureau of Economic Research, one of the top global economic research bodies.

"However, the truly impressive numbers... are that Irish affiliates receive a full 50pc of all fees and royalties received by US foreign affiliates, and pay 42pc of all fees and royalties paid by US affiliates," it added.

For the full year, Central Statistics Office figures released last week showed gross domestic product grew 5.5pc, compared with a 1.2pc pace in the euro area.

The Eurostat data released yesterday showed that the number of people in work rose by 0.3pc in the euro bloc.

The State ranked second in terms of job creation with 1.3pc in the quarter, behind Malta. The outlook for the eurozone and global economies have now been hit by the outbreak of coronavirus.

Consultancy Capital Economics said yesterday that it now believed the euro economy would experience a deep slump in the second quarter of this year and shrink by 1pc this year. "We are pencilling in only a small contraction in GDP in the first quarter, given that the economy was not affected during January and February, but envisage a slump of 3pc quarter-on-quarter in the second quarter," it said.

Irish Independent