Mazars managing partner Mark Kennedy declares himself "carefully optimistic" for Ireland's prospects as the country begins to navigate the new post-pandemic economic and societal landscape.
“Pandemic certainly isn’t gone,” he notes. “But we have shown that we can change. Mazars has shown it can change and so have business and society. There are definitely still risks out there but the Irish economy and people have shown great resilience over the past 18 months.”
He believes there are many positive outcomes which will potential arise from the changes brought on by Covid and others which were happening anyway. "The World Health Organisation has been saying for years that a pandemic is one of the big risks facing the world. Society has learned how to deal with a pandemic and a lot of learnings have come from Covid. People have learned how to do things differently. As the economy recovers from the pandemic, we will see renewed investment and there is definitely a potential lift in all of that."
Those changes include the shift to working at home, modified consumer behaviours, as well as improved business resilience. “We have also seen a repositioning of the role of the State, and it is more of a partnership with business now. I wouldn’t be blasé about it. The pandemic has certainly been an ordeal for people and businesses, but I do see a lot of potential positives as we emerge from it.”
Among those positives is the psychological impact of society and business opening up again. “There is a lot of energy coming from it. People are doing things differently we are seeing a lot of business model innovation.”
The rise of the environmental, social and governance (ESG) agenda which predates the pandemic is another cause for optimism, Kennedy believes. "Between the EU Green Deal, the Biden administration initiatives, and different things happening in China and Asia, we are seeing significantly increased investment momentum. It's unlike anything in the past 30 to 40 years. We see it in the number of banks issuing green bonds. More and more businesses are adopting green strategies. The engagement of the financial services sector is starting to drive change throughout the economy. This is positive for the environment, and it is positive for the social side. It is driving behaviour change and I see a lot of opportunities for business."
This is being reflected in regulatory change. “We have had the non-financial reporting directive for a number of years, and this is being expanded. More companies will be required to report on on ESG. It’s not just about investment and financial services anymore.”
Mazars is working with clients to assist them in dealing with these and other changes. For example, the ongoing audit reform process is looking at the overall reporting framework and governance standards. “It’s about resilience and sustainability in the long run and that’s a positive debate to have,” says Kennedy. “Yes, there are challenges and risk, but it will be good for society and the economy. We provide a combination of advisory and audit services to support our clients in these areas.”
While much has been said about the negative aspects of Brexit, there are opportunities as well, according to Kennedy. "I believe that Ireland can play a strong role as a bridge between new FDI and the EU. Ireland has a lot of intellectual capital built up in the attraction of FDI and this can be employed to our advantage now."
And that brings him to the often thorny issue of global tax reform. "It's a new beginning and Ireland has to be slow and careful in its approach to it. But I don't think we have a lot to fear if it is handled in the right way. Ireland is not a tax haven. That's not the business model we have for FDI. We have a much more comprehensive offering for companies which want to do business in Europe and globally. Ireland can do well in the new more transparent global regime but it's still a complicated set of arrangements. Governments with legacy sets of bilateral agreements adds to the complexity. We need to be certain about our business model.
“We have a tax structure and arrangement globally where companies are not constrained by nationality, but governments are,” he notes. “The two systems are butting up against each other to a certain extent. The current proposals if handled carefully and thoughtfully do provide a way forward to arrive at a reasonably fair arrangement. It’s more positive than not but there will be transition risk as we move from one model to another.”
He believes Ireland’s strong global reputation will stand to it in the coming years. “I am a member of the Mazars Group Executive Board,” he points out. “That gives me the opportunity to see what’s going on in different countries around the world and see Ireland in quite a good light.”
And tax is by no means the greatest challenge facing Ireland at present. “When you set it against what Brexit is doing to supply chains and what ESG is doing to change business models and cause people to re-evaluate what they do and their attitudes to resource intensive industries, tax is not biggest factor at the moment.”
Broadly speaking, all the issues he mentions are pandemic independent but must be viewed in its context. “I am optimistic for Ireland. A lot of that is based on the resilience shown in the last 18 months. All these trends do present opportunities for Ireland, for Irish businesses, and for firms like Mazars. I see a lot of opportunities for our clients, and we are helping our clients to take advantage of them. Mazars is relatively young in comparison to some of our competitors. We have grown through innovating our business model and I see further opportunity for that in the coming years.”