Uncertainty over ‘Brexit’ likely to delay investment in UK, Irish IDA chief warns
Multinationals were probably waiting for result of British referendum on EU before deciding where to locate, says head of Irish investment authority
Global corporations will think twice about investing in the UK while uncertainty reigns over Britain’s European Union membership, according to the head of the Irish state body that has attracted Apple, Microsoft and Google to Ireland.
Appealing to the UK to remain within the EU, Martin Shanahan, chief executive of the Republic’s Industrial Development Authority, said “it would be naive” if overseas investors were not factoring in the possibility of the British leaving the EU when deciding where to locate new factories and plants.
The IDA’s chief said: “Some of the foreign direct investment [FDI] only serves the UK market, which is a large market in itself, but some of it is to service a European market or the rest of the world. Some of those who are servicing a European market from the UK may choose to hedge their bets because of the referendum. They may wait until the referendum happens and do something only once there is an outcome.”
Drawing on more than 40 years’ experience at the IDA in dealing with foreign corporations and creating hundreds of thousands of jobs by attracting global companies, Shanahan said: “It would be naive not to expect that investors are taking this [Brexit] into account and the prospect that the UK would not be part of the European Union.
“I am sure they [foreign investors], like everyone, are watching and may delay their decisions if they believe there is uncertainty about the UK’s future in the EU. I think there is a possibility that people may delay an investment into the UK because of this uncertainty.”
On Ireland’s prospects for bringing in new FDI, despite the abolition of the “double Irish” tax loophole that has allowed corporations to slash their overseas tax bills, Shanahan said its death knell announced in the Irish budget last year gave multinationals enough time to prepare for its abolition.
The double Irish loophole allows US companies to reduce their tax bill far below Ireland’s 12.5% corporate tax rate by shifting most of their taxable income from an operating company in Ireland to another Irish-registered firm in an offshore tax haven such as Bermuda.
“There is a period where the companies can work out their arrangements over six years and I think for the most part these companies were extremely happy about the way that was handled.”
