Tuesday 20 February 2018

UK's difficulty is Ireland's FDI opportunity, says Shanahan

Wilbur Ross, the American Trade Secretary
Wilbur Ross, the American Trade Secretary

Donal O'Donovan in Davos

The UK's share of new foreign direct investment appears to be in decline, creating an opportunity for Ireland, according to IDA chief Martin Shanahan.

The UK has long been the favourite investment base for foreign investment into the European Union, but the 2016 vote to leave the European Union means executives are having to reassess the country's attractiveness.

Ireland is regarded as a "pro-enterprise and pragmatic" voice in European policy-making by corporate leaders, the IDA chief told the Irish Independent on the sidelines of the World Economic Forum meeting in Davos, Switzerland.

That includes on taxation, where Ireland continues to see the Organisation for Economic Co-operation and Development (OECD), not the European Union, as the best forum to pursue tax reform, he said.

The IDA chief executive is among roughly 3,000 high-level delegates from business, politics, academia and civil society attending the Davos event this week. As well as one-on-one meetings with business bosses, the IDA will host a dinner at a nearby hotel tonight, where Taoiseach Leo Varadkar and Finance Minister Paschal Donohoe will sit down with 70 senior corporate leaders.

The dinner is an annual event, but this year's will see an increased number of Asian chief executives at the event, which is traditionally heavily weighted towards US multinationals, Mr Shanahan said.

In Davos, tomorrow's arrival of US President Donald Trump is now keenly anticipated. Other notable figures here range from Blackstone's Stephen Schwarzman to Uber's Dara Khosrowshahi, Theresa May, Angela Merkel, Emmanuel Macron and Justin Trudeau as well as Nobel prize winners, academics and the heads of non-government organisations (NGOs).

President Trump is expected to tell them that his version of a strong America is also good for the global economy in his keynote speech on Friday. He'll also host a private dinner with invited heads of European businesses with a large presence in the US economy.

Meanwhile, the IDA said it has a strong pipeline of investments coming into Ireland, and expects further Brexit-related moves by financial services firms.

"We've had 16 financial services announcements to date and my expectations is we will see more," Mr Shanahan said. The IDA is also looking at grabbing jobs from businesses that plan to invest in Europe and might now look less favourably on the UK as a base because of Brexit.

"The UK was the most successful in Europe at attracting foreign investment, we haven't seen the hard data yet - we use FDI Markets to analyse trends - but all signs suggest there has been a slowing down (in the UK)," he said.

That's in the context of growing world and European economies, he noted.

"Ireland remains extraordinarily attractive as a location for investment," he said.

For many in Davos this year, the unpredictable US administration is the focus.

President Trump's advance guard at Davos launched a strong defence of America's approach to tax and trade, saying what's good for the US is good for the global economy.

Former Bank of Ireland director and shareholder Wilbur Ross, who is now the US Trade Secretary, along with Treasury Secretary Steven Mnuchin and Tom Bossert, the US Homeland Security Adviser, held a press conference in Davos.

The event moved markets, sending the dollar lower in currency trading after Mr Mnuchin said: "A weaker dollar is good for us as it related to trade and opportunities."

Mr Mnuchin effectively dismissed a move here last night by Canadian Prime Minister Trudeau to push ahead with a trade deal taking in much of Asia and the Americas without the US.

"We are fans of bilateral trading agreements. We believe in free and fair trade. Anyone who wants to do trade with us on a reciprocal basis is free to do it. We're looking to increase exports," he said.

Mr Ross, the Wall Street investors who turned a massive profit buying Bank of Ireland shares at the bottom of the market and selling them on in the early stages of the Irish recovery, also backed a more restrictive approach to trade deals.

"Protections are essential to having markets operate properly, to have everyone play by the rules," he said.

"Trade wars are fought every single day. Unfortunately, every single day there are various parties violating the rules and taking advantage.

"There have always been trade wars: the difference now is US troops are now coming to the ramparts," Mr Ross added.

The dollar weakened after his comments and those of Mr Mnuchin, who said that a weak dollar was good for the US.

"What we know is that the economy that's good for the US is good for the rest of the world," the secretary said.

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