Big US multinationals will be slow to heed President Donald Trump’s demands to bring operations back to the country because of “the chaos” currently existing in Washington, the head of Ireland’s biggest business group has said.
Businesses can learn to live with even penal tariffs, but they will struggle to cope with a business environment that can change day by day, Danny McCoy, the director of the Irish Business and Employers’ Confederation, Ibec.
“It’s hard to see how the US can actually credibly invoke the return of investment back into United States. Corporates will say the right things, but it’s a big call to go back into something that’s so random and so uncertain,” he said.
Mr McCoy was speaking at a conference jointly organised by Ibec and the Confederation of British Industry at the Ballymascanlon House Hotel near Dundalk.
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However unpleasant, tariffs are “slightly a distraction”, but even US-based multinationals will think carefully before they would “wilfully” bring investments “back into a regime that’s so chaotic at the moment”, Mr McCoy said.
Equally, it must be remembered that “a lot of the money in United States stock markets and so on is not US money, it’s international money attracted to the safe haven that was the US”.
Mr Trump has “ripped up” the reserve currency status of the dollar: “So, what we’re likely to see that where the money goes for investment globally is not the United States,” he said.
The question now for European Union states is whether they can get their “act together to not only attract” their own money back, but equally to find ways to dramatically boost investment across the EU.
On tariffs, research by the Economic and Social Research Institute has shown that Ireland could live with even a permanent tariff of 25 per cent on goods going to the US: “You can adjust around tariffs,” he declared.
Echoing some of the points made by Mr McCoy, Taoiseach Micheál Martin said the state of the world’s geopolitics creates opportunities for Ireland and the United Kingdom, especially if they can work together on issues of mutual concern.
“With challenge and with turbulence comes opportunity as well,” he said, adding that major business leaders have told British Prime Minister, Sir Keir Starmer and himself that the two countries are now “seen as a safe haven internationally for investment”.
International investors have noticed the improving relations between the two countries in the wake of the Brexit disagreements, but “also the common views, the common rules, basic sort of steadiness of how things are going”.
Questioned about the tax and financial issues that are affecting people from the Republic and Northern Ireland who are working in the other jurisdiction, Mr Martin said those problems will have to be resolved.
“It is complex. It’s not simple. My view is we do need to try and bring this to some conclusion because we do really have to reduce barriers and increase labour mobility,” he said.
Currently, 18,000 people are known to cross the border daily for work, but, in reality, a far greater number do so but they use a relative’s address as their residence for tax purposes – the so-called “grannying” option.
Though the workers do pay taxes to HM Revenue and Customs, or the Revenue Commissioners, they leave themselves open to tax audits, possible penalties and welfare complications by acting as they do.
In addition, many workers who fully declare where they live are unable to get mortgages because financial institutions are unwilling to offer loans to people whose income could be affected by currency fluctuations.
Extolling the value of all-island jobs mobility, Mr Martin earlier told the conference: “One of the big things we say to US, or global multinationals is that we’re part of the European labour market and there’s free mobility of labour.”
“We want to develop the all-island skills agenda to meet our future skills needs – for instance in construction and infrastructure ‒ to better harness the potential of the island-wide labour market, for workers and employers,” he said.
