Republic attracts 20 times more investment than North

The Irish Republic attracts 20 times more foreign investment than Northern Ireland, which has now just 26% of it’s southern neighbour’s economic value, down from 45% just 13 years ago, according to a report from Goodbody Stockbrokers, who conclude that a reduction in Northern Ireland’s corporation tax rate would give a huge boost to the region’s economy.

Not surprisingly, the report also cites the area’s reliance on the public sector as a drag on economic activity and entrepreneurship.

“In the most recent data available, the public sector accounted for 27pc of gross value-added (GVA), compared with 18pc and 15pc in the UK and Republic.

“This heavy reliance on the public sector may be partly attributed to the weak rate of entrepreneurial activity in the province. As a measure of this, business registrations per 1,000 population were 30pc below those in England in 2003,” it says.

The report also notes that while the Isle of Man and Channel Islands can set their own taxes as they are not actually part of the UK, any cut in the North’s taxes might require EU approval as well as a British government decision.

Is it not time for the parties in Northern Ireland to start campaigning for a harmonisation of corporation of tax rates with the Irish Republic so that the area can compete on a level playing field?

  • beano; EverythingUlster.com

    If the assembly ever got back up and running again, would it be beyond the realms of possibility to develove responsibility for corporation tax levels to them?

    And is it just paranoia or would Sinn Fein seek to keep them high since it’s not really in their interests to make NI work?

  • JFD

    I don’t think Unionism would endorse any overt move to harmonise NI’s corporate tax system.

    Interestingly I’m in dicussions with an NI company at present and although the CEO is a ’emotional Unionist’ (his decription) he has also discribed himself as an ‘econimic nationalist’ meaning when courting foriegn business his company adopts a resolutely ‘Irish’ brand identity.

    Off topic slightly but the idea of an ’emotional’ unionist personal identity with an economic ‘irish’ identity could find echo’s in any new tax rationale in NI

  • smcgiff

    Diversifying from Plastic to Economic Paddy! 😉

  • mnob

    Two words – continuity IDB

    Ask any businessman about the contribution INI make to the economy and they will tell you that it’s a negative one.

  • George

    Beano,
    even if the Assembly gets up and running, they have no power to change to corporate tax rate. The parties would have to petitition Westminster and the EU.

    Forget SF, if the DUP don’t support it, it hasn’t a hope and the DUP would have to give something pretty big for the government to give Northern Ireland this huge advantage over other parts of the UK. Powersharing with SF perhaps?

    My own view is first start looking at the fact that 35% of all working people in NI are in the public sector.

    Northern Ireland needs to take the economic pain of getting this figure down to around 20% or it will never close the gap on the rest of the UK or the Republic.

    Even with all the efforts, investments and peace dividends of the last 8 years, the gap to the Republic has widened substantially while it has remained constant with the rest of the UK.

  • spirit-level

    beano
    a sound case for a united ireland– that’s if you’d like to see prosperity

  • aquifer

    ‘I don’t think Unionism would endorse any overt move to harmonise NI’s corporate tax system.’

    Would they rather piss the UK subvention down the Golf Club urinal than have the place swarming with international entrepreneurs?

    Michael McDowell the UUP need you right now.

  • aquifer

    ‘even if the Assembly gets up and running, they have no power to change to corporate tax rate. The parties would have to petitition Westminster and the EU.’

    I don’t think any of them would give a fiddler’s so long as the people asking included 25% of either side, and would happily change the law.

  • IJP

    Is it not time for the parties in Northern Ireland to start campaigning for a harmonisation of corporation of tax rates with the Irish Republic so that the area can compete on a level playing field?

    Please, would people stop blethering on about this?

    It simply cannot happen.

    Parties only continue to suggest it because it’s a very convenient way of having to say something realistic and feasible and creating a proper economy in NI.

  • aquifer

    ‘Parties only continue to suggest it because it’s a very convenient way of having to say something realistic and feasible and creating a proper economy in NI.’

    i.e. doing their job for a change

  • cladycowboy

    Beano,

    ‘And is it just paranoia or would Sinn Fein seek to keep them high since it’s not really in their interests to make NI work?’

    With all due respect Beano, it could be viewed as Unionism wanting to operate like ROI and enjoy the benefits reaped by doing so without actually joining it. Not in their interests?

  • PatMcLarnon

    An arguable case for harmonisation between INI and it’s sister Agency in the rest of Ireland. Adopting best practice in attracting foreign investment seems a worthwhile policy.

  • Ringo

    An arguable case for harmonisation between INI and it’s sister Agency in the rest of Ireland. Adopting best practice in attracting foreign investment seems a worthwhile policy.

    Pat – do you think that the IDA would have any interest in trying to bring foreign investment to the North – at the expence of somewhere in the South? I can’t see it myself.

    It isn’t like tourism where there massive potential for a synergy, in this case it is cut-throat competition, north against south – and an either/or situation 99 times out of 100. Its a buyers market, and the IDA have more than enough towns and cities to sell, and by extension local politicians and lobby groups to keep happy. There is only so much FDI out there to be had.

  • Fraggle

    From IDA’s website.

    Regional Profile – Co Donegal, North West Region (Donegal)
    The North West region comprises of three counties, Donegal, Sligo and Leitrim. It has a population of over 220,000 (2002 Census). Donegal, the largest of the three Counties, has a population in excess of 137,000 (2002 Census). Letterkenny is the County’s largest urban centre and has a population of 346,143 within a 60 Km radius.
    The County is served by the national primary routes N15 to Sligo and the N4 & N2 to Dublin. The airports in Derry, Carrickfinn, Sligo and Knock have daily scheduled flights to Dublin and UK for onward connection to Europe and US destinations.
    The County is an operating base for some of the worlds leading companies including: Hospira (formally Abbott Laboratories), Prudential Insurance Company of America, PacifiCare Health Systems, Boston Scientific and Medisize Donegal Healthcare. The county has a network of IDA quality Business Parks with the necessary telecommunications & utility infrastructure to meet the needs of multinational clients.
    The Institute of Technology located in Letterkenny has a student population of over 2,000. This Institute and the Sligo Institute of Technology (3,500 students) provide a broad range of courses in schools of Business, Engineering, Science, Nursing, Computing and Design. The close proximity to Derry also allows students from Donegal to study at the University of Ulster’s Magee College campus which has a student population of 3,500. Also, the North West Institute of Further and Higher Education based in Derry has in excess of 20,000 students enrolled. This institute offers a wide range of courses to Certificate and Diploma level.

    As you can see, the IDA can’t market Donegal without including Derry in the picture. I would say that there is a ‘massive potential for synergy’ here.

    Investment and jobs going to Letterkenny benefit the people of Derry too. The IDA is running out of people to fill the jobs that are being created. So much so that thousands of immigrants are coming in to fill jobs. The border region has huge potential for investment but sadly the border itself is a barrier to the investment coming in.

  • IJP

    acquifier

    Correct!

    Pat

    I think it’s easier, in all honesty, to make the all-out case for political unification before you can make the case for Investment Agency unification!

    Ringo is correct, but note my fundamental point above that the two jurisdictions are simply fundamentally different markets – with different tax rates, different education systems, and fundamentally different attitudes towards business.

    There may be a case for some enterprise focus on the border areas (e.g. investment in Donegal can create jobs for Derry or vice-versa so it’s in everyone’s interests), but overall frankly in the North we have far too many ‘agencies’ and far too little coherent strategy.

  • Fraggle

    IJP, if you get rid of all the agencies up here, you get rid of the bulk of the economy.

  • IJP

    Fraggle

    Correct.

    And it is London which pays for these agencies.

    So there isn’t really much point in talking about anything else until we have a functioning economy (notwithstanding the point that that depends in itself on a genuinely stable security situation).

  • Gerry O’Sullivan

    Beano

    If the assembly ever got back up and running again, would it be beyond the realms of possibility to develove responsibility for corporation tax levels to them?

    Let’s imagine for a moment that Gordon Brown decided to allow Northern Ireland’s corporation tax rate to match that of the Republic.

    What would happen?

    Both Scotland and Wales would quite likely demand the same treatment, and maybe a few areas in England as well, like the northeast or Merseyside.

    As IJP said, it’s not gonna happen.

    When you’re a member of a club, you have to follow the same rules as everyone else.

  • Ringo

    Fraggle

    I agree. I was going to say that Donegal is an exception due to its proximity to Derry, but I thought I’d get away with it. I would suggest it is more parasitic than synergic – Donegal piggybacking on Derry’s infrastructure, nothing wrong with that, its all part of the game. Do you honestly believe that the IDA don’t care which side of the county line that jobs are created?

    BTW the IDA are always getting a hammering from the people in especially West Donegal for the lack of investment in recent years versus the no. of closures.

    The border region has huge potential for investment but sadly the border itself is a barrier to the investment coming in.

    Why has it anymore potential than anywhere else?
    This is often stated as a truism, but can you give me any concrete examples as to why the border itself “is a barrier to the investment coming in”?

    Personally I don’t think the border is a fundamental barrier to investment, certainly not any more than the Atlantic washing up on the west coast.

  • IJP

    Gerry

    Firstly you’re entirely right – GDP per capita is in fact lower now in Wales than even in NI according to the recent Goodbodys report and other sources I’ve seen, so it is an even clearer-cut case.

    But secondly, it’s illegal. EU regulations simply do not allow for different corporation tax levels within a single state. The RoI got around it for a while, but they’ve tightened up which is why the rate is the same across the board (both in terms of regions and industries) in the Republic now.

    So the ongoing blether about it from politicians and, even more, the media (Derry Journal is the latest guilty party) is totally irresponsible.

    We need real economic strategy, not pie in the sky. The Republic showed it can be done.

  • john doheny

    You are all missing the argument re: corporation tax harmonisation that boat has already left. The IDA has given up on low corporation tax as an incentive during the next decade. This is because the new EU accession states have stolen their policy of low taxes and reduced them to zero.
    Competition according to the IDA will now be based on knowledge based industries and internationally traded services.

    For those interested their new slogan is

    ‘Ireland knowledge is in our nature’