Ireland has a mountain of debt to repay - a whopping €85bn - and a mountain to climb in terms of restoring its reputation with international partners. Yet, Dublin insists it can beat off all competition.
Following on from such core changes, many economists like Fergal O’Brien, chief economist at the Irish Business & Employers Confederation, believe that the country can grow itself out of its current debt. Why? Because it has done it before.
Back in the 1980s a fiscal nightmare played out when in the latter half of the decade the unemployment rate reached 17.5%. Today, it’s four per cent lower. Ireland’s exports are a runaway success story and place the country’s economy in a strong position to benefit from recovery in the world economy. Although it’s early days, anticipated global growth in a hoped for cycle of at least seven years, would give Ireland’s export industries, which make up at least 90% of the country’s GDP, the chance to participate and prosper.
Now tell the world
Barry O’Leary, chief executive of the Irish Development Agency, is frank about the reputational damage the country has and is still suffering from, and refuses to shirk from the responsibilities his agency has in putting the record straight.
“The big challenge is to interact with corporates around the world to make sure they understand the different elements of the Irish economy, so they know the history of the banking bail-out and the budget deficit financing and some of the knock-on effects this has had on ratings. And, it’s very important to us to position that properly with key clients. So we’re currently involved in a programme with the top 65 multinationals who are in Ireland and we’ve been meeting them around the globe at CEO and CFO level to put in context what’s behind some of these headlines.”
Ireland’s offering to the international fund community is undoubtedly strong as over 20 years of experience and expansion has returned a centre of excellence both in terms of product and service.
Other key attractions and incentives appreciated by foreign investors include a talented, skilled labour force, a regulatory environment that enjoys a world class reputation on compliance and supervision, and a fund distribution network that covers some 70 countries around the world.
What else? Oh, yes a little enabling tax incentive such as the renewed confirmation that the country’s much envied 12.5% corporation profits tax rate won’t be tampered with. This rate is one of Ireland’s trump cards (compare that with Luxembourg’s rate bruiser of 28.59%, for example), coined neatly by former Taoiseach and current president of the International Financial Services Centre John Bruton as Ireland’s ‘nice little earner’.
Given that these tax receipts represent 2.5% of the country’s GDP and there is an awful lot of debt to repay, upsetting the certainty of such revenue would be counter-intuitive as the new political leaders will lose no time in pointing out to their European bail-out creditors.
Not that Irish funds domiciled in Ireland have to worry over such tax rate differences. Irish funds pay no tax and, the industry leaders are emphatic that this situation won’t change. All of which makes Ireland the most favourable tax environment for internationally distributed investment funds.
Further good news on the tax front which the Irish are happy to broadcast far and wide includes over 60 double taxation treaties which significantly contribute to the overall tax efficiency of Irish funds.