The political and social ties binding Ireland and the US may on the surface appear weaker since both nations ushered in new political leaders. The reality, however, is that our nearest neighbour, the UK, is weakening ties – politically and economically – with Ireland and the rest of Europe, and the United States now offers the greatest opportunity for this country to thrive in a post-Brexit global economy.
Two-way relationship
Irish companies have created nearly as many jobs Stateside as their US counterparts have here, according to Mark Redmond, chief executive of the American Chamber of Commerce Ireland. “It’s an active two-way relationship,” he says. “All 50 states now have Irish companies operating and creating jobs in them. There is a lot of innovation happening thanks to Irish investment.”
On the flipside, US investment in Ireland is at record levels. The total now exceeds $350 billion (€297 billion), the highest it has ever been.
US corporations have been instrumental in helping Ireland reach its current high rate of growth, which is the highest in Europe," explains Martin Shanahan, chief executive of IDA Ireland. "Over 720 US companies have established and/or expanded operations in Ireland – Hubspot, Analog Devices, Regeneron, Amgen, Bank of New York Mellon, Bank of America and GE, to mention a few.
“Ireland’s attractiveness to American companies remains and partnerships can continue to flourish in the ever-changing global business environment.
“Together, both IDA Ireland and our American partners look forward to the continued development of relationships and success for both our great countries.”
Maintaining that pipeline of FDI, while also fostering the phenomenal growth of Irish-born businesses in the US, is no easy task, with complacency being the greatest threat. "In terms of FDI, the reputation of Ireland is incredibly strong right now among corporates in the US and Ireland remains a top location of choice for US business," says James O'Connor, president of the American Chamber of Commerce Ireland and managing director, Microsoft International Operations, EMEA Operations Centre.
“This has once again been demonstrated by a strong pipeline of investment announcements by companies this year including my own, at Microsoft. Ireland is scoring highly, thanks to factors such as the availability of talent, our membership of the EU, proven track record and our pro-business and certain legislative environment – a really invaluable ability to be able to provide certainty in a more uncertain world.
“Ireland must continue to be ambitious and aspirational, stay focused on protecting our world-class reputation for international competitiveness and avoid complacency,” he warns. “We need to focus on the factors within our control – solving our capacity issues and improving our ability to innovate. A big part of that is how we collaborate with Government, the education sector and business, including the indigenous sector.”
The Brexit effect
Given the economic importance of the UK market to Ireland, Brexit will hurt, at least in the short term. “The decision by the UK to leave the EU has introduced areas of challenge and opportunity for our members,” says O’Connor. “Ensuring freedom of talent and movement of people across these islands is probably the most critical issue our members are concerned about at the moment. Then there’s the trade implications and avoiding tariffs or any kind of barriers which don’t exist today – and we look at that trade both in terms of physical and digital trade. Thirdly, avoiding future divergence in regulatory environments between the UK and EU, and finally, being aware at all levels of the need for Ireland to build new relationships and partnerships across other EU member states.”
Dwelling on the negative is a fruitless endeavour at this point, especially when there are so many opportunities also afforded by Brexit. Ireland will be the only English-speaking country in Europe. From a US investment perspective, that is priceless and that’s only the beginning.
“Ireland has experienced significant growth in the area of foreign direct investment in recent years,” says Shanahan. “Companies tell us that a key reason for investing in Ireland is the ability to source talent, which combined with Ireland’s long track record of attracting global companies, makes a compelling case for FDI. This is underpinned by our strong tax offering which rests on a central pillar of a 12.5 per cent corporate tax rate.
Guaranteed access to European markets, our education system and the general ease of doing business in Ireland add to these positives.
“Brexit will make us increasingly attractive for US FDI,” explains Feargal O’Rourke, managing partner at PwC. “Ireland already punches above its weight but there’s no doubt since the vote there’s been increased interest from US companies looking to enter the European market. Will it yield massive benefits? No not necessarily but there’s no doubt being the only English-speaking country in the EU counts for a lot in the US.”
Boston or Beijing?
While existing cultural, historical and economic ties with the US make it the obvious economic region to focus on post-Brexit, there’s a whole world out there.
“We’re starting to see a lot more trade out of China, and the APAC region generally, coming into Europe,” says O’Rourke. “It’s not going to replace US investment in Ireland but we now have an official Asia economic policy, which is tangible evidence of the importance of this massive market to Ireland’s continued growth.”
Given the existing economic ties, not to mention the collegiality between Ireland and the US, keeping one eye on the rest of the world is necessary but not at the expense of any of our US FDI focus. The key factor in keeping US companies interested is, according to American Chamber chief executive Mark Redmond, is definitely talent. “Our reputation for a country with a skilled workforce is now well-established,” he says. “There are 80 different nationalities currently working for MNCs in Ireland. We need to ensure they are loving life in Ireland. A big part of that is our personal tax regime. We must ensure to benchmark our personal tax regime against our competitors to compete for increasingly mobile talent in a globalised world.”
