Friends with benefits: A taxing problem for Ireland in a post-Brexit world Britain outclasses anywhere in the EU for attracting inward investment, partly because it is in the EU, and Brexit will leave some of those tens of billions looking for a new target. Since Ireland already does well in this, Brexit could turn out rather well for the emerald isle. On the surface, a UK exit from the EU could mean …
"The EU could easily oscillate between sticks and carrots for the UK to stay"
"The stresses of Brexit and attempts to retain the UK may even cause the EU to break up"
In theory all of that happens before the 23rd of June... if it's a no vote the government can't really get away with ignoring the result despite it not being legally binding. Or will the EU suggest that the UK vote again and get it right next time?
" if it's a no vote the government can't really get away with ignoring the result despite it not being legally binding. "
We have no idea what will happen next week, but if the result of a vote to leave is a Sterling crisis of sufficient magnitude, the Government may have no choice but to reject the referendum result, just as it had no choice but to leave the ERM on Black Wednesday. If the £ drops 10%, say, or UK debt is downgraded significantly with a corresponding increase in borrowing costs, there may be no option. Pretending that the rest of the world doesn't exist is one thing, reality is a tough mistress.
I was in the City on Black Wednesday and at lunchtime it looked as if there might be no point in returning to the office since with interest rates at 15% our company wasn't viable. I was appalled last Saturday to find that none of the people on the Vote Leave stand in town had any financial experience whatsoever, nor did they have any idea of how government actually works. Failure even to acknowledge risks is stupid, no matter what side you are on.
No chance. If we vote to leave we are gone, outta here, adios. Sterling will slide but not catastrophically. Markets don't like uncertainty. Once the result is in, whatever it is, that's a big chunk of uncertainty removed. Enough investors will have confidence in a post-Brexit Britain to stop the markets going through the floor. But ... how things will be in the long term compared to what they would be if we stay - nobody knows.
The only scenario I can see in which a Brexit victory doesn't stand is something like the following. Cameron tries to cling on as leader and so a vote of no confidence triggers a general election. This is fought between Corbyn, who promises to rerun the referendum, and a fractured Tory party led by Boris, who undertakes to honour the original result.
> The only scenario I can see in which a Brexit victory doesn't stand is something like the following
How about this:
* Frantic backroom discussions take place
* Cameron comes out waving a piece of paper with various minor concessions
* Says this new EU is so much better than the old one, UK should be in it
* Referendum is re-run
* People get bored, don't turn up to vote, 50.5% say Remain on a low turnout
* Job done
See: Maastricht treaty.
> ...just as it had no choice but to leave the ERM ...
Which was really a beta version of the Euro - and just as flawed. It failed for the same reasons the Euro is bound to fail - sooner or later, with the damage done depending on how long certain factions keep faith with their dogma.
It doesn't really need too much nous to realise that having one single currency across such disparate cultures and economies only works if you also have centralised controls on the levers that control those economies. The ERM didn't have those controls and it failed. The Euro doesn't have those controls, and as people wake up to the fact that the Euro is really an excuse for introducing those centralised controls, it too will fail.
IMO, if we do vote to leave, I suspect the result won't be as bad as some predict. I suspect it'll set off others seriously considering their position - and before long the EU as it is now will fail. Perhaps then we can get back to what was good about the "Common Market" we actually signed up to - without the bad political crap we have now.
No I can't predict what will happen - but I think the next few years could be "interesting" !
"[...] and before long the EU as it is now will fail."
There is already a trend for right-wing governments with protectionist policies. That would be accentuated if the EU breaks up.
A moot point is whether Putin wants a united EU for negotiations - or wants to pick off member states to re-establish a USSR style buffer zone. NATO should be a united deterrent - but if the USA goes into isolationist mode then the scene is set for a return to 1930s politics.
Re your comment about the Euro - yes that's all correct but what on earth does that have to do with the UK's EU membership? We're not part of any compulsory bailout mechanisms, so the mis-structuring of the Euro is simply no reason whatever to leave. Even our EU membership fees are what they are because we're doing bloody well. The sort of totally tax and domestic spending we get from the city of London's privileged status of being the world's largest Euro forex trading centre and being the world's financial capital (thanks to EU membership) frankly, far outweighs what we pay in EU membership fees, no question.
> Re your comment about the Euro - yes that's all correct but what on earth does that have to do with the UK's EU membership? We're not part of any compulsory bailout mechanisms, so the mis-structuring of the Euro is simply no reason whatever to leave.
I don't think you read my post very well did you ?
I know we're not in the Euro, but the Euro is at the root of a lot of what's wrong with the EU as it stands now. A lot of our complaints are to do with the centralisation of power and the imposition of fiscal policy - and that is required for the Euro to function.
IMO, the EU won't (and can't) reform to deal with many of the structural problems until the Euro collapses. Simply put, as long as the Euro is kept as it is, there is no way to reverse the integrationist policies, and no way the problems will get fixed. If the Euro breaks up and we get back to separate currencies, then there is scope for proper reforms, and getting back to what the Common Market (ie the thing we joined) was originally about - because we sure as hell didn't join the EU as it is now !
So, I think leaving will be painful (and certain EU countries will be keen to make it visibly so to deter others) - but in the medium-long term I think it will be less painful than staying. I could even see a situation where we vote to leave, it's the trigger that other countries have been looking for, and the EU as it is now breaks down. When the dust settles, what's left may be something we'd consider staying in - cue a new referendum on whether we still want to leave.
But like so much of the hot air that must be causing global warming by now - that is pure speculation.
ERM didn't fail. The pound's membership of it failed, because Thatcher/Lawson insisted on entering at a level which was much too high to be sustainable.
Erm... You do realise Italy went out on the same day as us? And yes, the ERM failed. Because it was unsustainable. We also probably went in at the wrong level, but then it wasn't just us that set the level. Germany tried to get everyone's currencies into both the ERM and the Euro at the highest level possible against the DM, to help with exports.
France was also in the ERM at too high an exchange rate. That's why they barely/never got their unemployment rate below 10% in the 90s - and because that rate continued into the Euro, they've had high unemployment ever since.
But actually, the level you enter at is irrelevant. What happens when your economy changes? This is the great thing about currencies. Sure you get volatility, and this causes economic uncertainty. But it also separates your domestic economy from the interantional one. So internal prices and output are less affected by external shocks. The exchange rate change acts as a cushion. It also acts as a way of bringing the sytem back to equilibrium. If you have a trade deficit, like us, your currency naturally falls (less demand for sterling as we're using more foreign currency to buy our imports than foreigners are using sterling to buy ours). That drop in the value of sterling then makes our exports "cheaper" and what we import more expensive. Thus helping to correct the trade imbalance, as domestic production becomes cheaper than imports, and exporting becomes easier or more profitable.
The Euro have foregone this cushion. And so must adjust demand for imports by wage compression. People really, really don't like wage cuts. So this is harder, and more economically painful. And takes longer. And causes political crises. Also if you share your currency with untrustworthy folk, it gets worse. So when Germany broke the rules of the Euro by artificially pushing down wages in the 2004 Harts IV reforms that was equivalent to devaluing the currency. And that reversed Italy's old trade surplus with Germany - which is one reason why Italy's economy is now smaller than when it joined the Euro. And one reason why Germany now has a trade surplus of 7% within the Eurozone, when the rules of the club state that if it goes over 5% the government must take action to dampen exports or inflate internal demand.
Also see the Greek government fiddling the figures. But then also see the Northern states creating onen of the biggest disasters in peacetime economic history by fucking up the Greek bail-out - and then when their policies that everyone sensible said were bound to fail failed, then continued with them as they failed again. Then in the latest bail-out continued with them some more. The IMF debt-sustainabiliy forecast for Greece is that unemployment will fall from its current 25% to 12% (still bad recession level) by 2040!
Finally, I give you Finland. The ultimate argument for why the Euro sucks. Their economic growth has been pretty much the same as Sweden's for the last few decades. Although I can't find the graph for that at the moment. But in searching I found this article, which will do: Telegraph linky. The short version being Finland being unable to devalue has not been able to get out of the recession that started in 2008. Sweden has.
Voyna i Mor,
If Sterling drops by 10% overnight, we just ignore it. And it'll probably bounce back to a normal-ish level once the panic is over.
Although given our currently growing trade deficit (with the EU - we have a trade surplus with the rest of the world) sterling is naturally going to drop at some point anyway - and this may be the trigger as much as anything else.
As to a crisis in government debt pricing, our average debt maturity is incredibly long, so the immidiate needs of re-financing are relatively low. We are however running a government deficit. So there's a funding need, but the Bank of England can always launch QE.
Anyway fears of a market panic on government debt are massively overblown. We keep hearing it, but in the current economic climate the markets have to put their money somewhere. Given that Italy can borrow almost as cheaply as Germany, and even Greece can get short term paper sold - I see no likelihood of a long term problem here. When we got downgraded it had pretty much zero effect. If the worst happens, the Bank of England will just have to launch more QE.
As for leaving the ERM vs ignoring a referendum, the two are completely different. If the government says stuff's bad so we're ignoring you, it won't last the week, before a vote of no confidence and general election. Whereas we were forced out of the ERM because it wasn't possible to stay in. Leaving the EU may cost us more, but is a possibility.
On the other hand a renegotiation and second referendum is possible. Unlikely though. But the rest of the EU governments are starting to worry now. The logical thing to do is for a bit of consulting before launching article 50 of the treaty (to start the formal 2 year leave negotiations). And in that process it may be that a deal on immigration curbs could be offered? The 4 freedoms aren't so inviolable that they stopped the Eurozone imposing supposedly illegal Capital Controls on Greece last year, and Cyprus in 2014. Several of the Eurozone bailouts were illegal before they were done, and the ECB has broken the treaties several times in it's various gyrations. If there's the political will, something could be negotiated that Cameron felt was worth re-running the referendum with a good chance of winning. There's a clear majority of voters in polls who'd like to stay in a reformed EU. Myself I don't think the politicians can dance fast enough to come up with a deal before political pressure kicks in, and they may not even want to anyway.
"As for leaving the ERM vs ignoring a referendum, the two are completely different. If the government says stuff's bad so we're ignoring you, it won't last the week, before a vote of no confidence and general election."
Just saying that the two are completely different doesn't make it a fact. Remember Macmillan's famous comment about what the problems were for governments? "Events, dear boy, events." Or Harold Wilson's "Three weeks is a long time in politics."
My point is that governments are pushed and pulled by external factors. The referendum is basically a control struggle between two wings of the Conservative Party - the modernisers like Cameron and the people like Peter Bone, about whom the less said the better. You're basically reassuring us that everything is going to be all right no matter what; I'm saying we don't know. In the past, withdrawing from major treaties has usually been a prelude to shooting war; this is new territory.
As for immigration controls - half or more of our net immigration appears to be from non-EU countries. It is not hard to work out why politicians like Patel are in favour of an exit; they're counting on us needing those immigrants and having to go to India or Pakistan to find them*. The EU is nothing to do with non-EU immigration, so how leaving will change it I do not know.
" There's a clear majority of voters in polls who'd like to stay in a reformed EU."
Really? How do you know that since we don't even know what a "reformed EU" would look like?
"If Sterling drops by 10% overnight, we just ignore it. And it'll probably bounce back to a normal-ish level once the panic is over."
Yes, people like me with a fairly wide investment portfolio, long and short term (and presumably you) can "just ignore it." Well qualified people like my kids will be welcome abroad if their jobs go titsup in the UK. I too am pretty much all right, Jack, but a lot of people are not. People in Greece really suffered - and I agree it was because of a mix that included the EU, but the fact is that they did suffer as a result of bad policies ignorantly executed by self seeking politicians, most of them Greek.
*I have Indian relatives, there's nothing personal in this. In fact, I do get that the British Empire means our national identity is deeply interwoven with the Caribbean and the Indian subcontinent. I just detect considerable hypocrisy from all quarters on the subject of immigration.
Just saying that the two are completely different doesn't make it a fact.
Yes it does. It's a fact that the ERM was a system of exchange rate pegs which needed continuous active market intervention to maintain, once they became disconnected from the underlying economics. There are only limited ways to hold onto an exchange rate peg, and they have their own economic consequences. Even the Swiss had to give up on their's (and allow the franc to rise) which was actually allowing them to print free money and sell it to foreigners, they were so desperate to exchange their Euros for Swiss francs. Whereas we were trying to keep sterling from falling, which is the much more expensive way. They were forced out against their will, because of the cost in limited reserves and required interest rates.
The EU is a political construct. After losing a referendum the government has the option to stall and try to renegotiate, offering another referendum. But if it ignores the result, then it's ignoring democracy. That would create the biggest constitutional crisis since 1911 and destroy the Conservative Party. It's simply not a feasible option.
Also, you can't have a Remain campaign that warns of economic disaster and then say, "we're surpirsed by the economic disaster so we're annulling the result". Voters were warned and still went ahead. You're living in fantasy-land if you think otherwise. The ERM was not a choice, it was an event the government was force to respond to, the EU membership is a political choice.
" There's a clear majority of voters in polls who'd like to stay in a reformed EU."Really? How do you know that since we don't even know what a "reformed EU" would look like?
Because I've read the polls perhaps?
The polls do not state what people mean by reform. But the point is that there are many people who have no strong opinions either way, or strong opinions both ways, who can probably be swayed by the right reforms. It's pretty clear that one of those is a limit on migration. I saw a poll the other day that said 60% of voters believed leaving the EU would be bad for the economy, but only 29% thought the economy was the top issue in the referendum. With 45% saying the top issue is immigration. If Remain lose, the EU's inflexibility on immigration will be the reason. Plus a pretty poor campaign.
If sterling drops by 10% it will have a limited effect on ordinary people. Even 20%. In 2008 sterling fell by 20%, and inflation only hit 4%. The point about exchange rate movements is that they cushion shocks to the internal economy. That's the whole reason why the Euro has been such a disaster. Well that and astonishing levels of incompetence.
I don't think it's going to happen, but let's imagine a Leave vote.
An amusing fact is that the Leavers bang on about loss of parliamentary sovereignty, but should they win would insist that it be overruled! There is no doubt at all that a free voite of the houses of parliament would be overwhelmingly for Remain.
What happens next? Dave and George and chums are toast. The Tories are so split that there is no way that Boris can be parachuted in and then win a vote of confidence, so it's general election time. This referendum is all about the Conservative party, and I doubt that the electorate is likely to thank them for it, so there is a very real possibility of a change of government. The new guys would be perfectly entitled to claim that the referendum was nothing to do with them, and that they're going to ignore it.
I hope that this remains hypothetical.
-A.
"Yup, that's long puzzled me too."
Here's the explanation. The Leavers actually believe in democracy, not parliamentary tyranny sovereignty, and so a referendum result clearly overrules any vote in parliament.
Leaving may be the wrong choice, but it is internally consistent.
>The Leavers actually believe in democracy, not parliamentary tyranny sovereignty,
Then they're idiots. The international corporations will make the decisions - not parliament and, definitely not, the people.
At root - that's what this Brexit campaign is about - bandits like Murdoch, who can easily buy/bully one government, but struggle to bully 28.
> Here's the explanation. The Leavers actually believe in democracy, not parliamentary sovereignty
Well, it's an explanation, but I don't think if fits the facts very well.
> and so a referendum result clearly overrules any vote in parliament.
In Switzerland it would. But not in the land of the Crown in Parliament.
They've kept quiet about it during the campaign, but these guys are otherwise always going on about parliamentary sovereignty and how "Brussels" erodes it. They were also prominent in opposing any change to the rather undemocratic FPP voting system in the last referendum. The European Parliament is arguably much more democratic than Westminster.
-A.
The government has no interest in a 'leave' vote, except it would be political suicide to ignore the outcome of the referendum. It's probably why all we're getting is FUD, not facts.
Who remembers why we are even having a referendum? Why hasn't that been mentioned? Why go on about migrants or NHS or all the non-issues? Why talk about how the government, who is arguing we should stay, wants to revoke the human rights act (which, if it was an EU issue would mean they'd want us to leave instead).
Pretty much everything has been FUD from both parties, which is odd. The leave campaign has a lot more topics to discuss than they have, so why are they so silent on it? Why is it the only place those topics is being discussed is by private individuals? Its as if no one wants us to be able to make a truly INFORMED (unbiased) decision.
I'm not so sure, it's accountable to Parliament which in turn is accountable to voters, and many of those voting for Brexit are like man-children voluntarily making themselves unemployed. I'm not sure they should be listened to. But yeah ok I take your point.
"no one can provide a good reason to stay in the eu. Just lots of FUD about leaving."
You don't need to believe that option A is good, just that it is better than option not-A. It's like running away from a crocodile.
Quite a few people have said to me that they'd like an option C of "an EU not run by clueless twats". These people tend to have a fairly dim view of Westminster as well. Perhaps we all do, and simply disagree about whether A or B is more likely to get to C in the end.
Both the government and the opposition leadership have declared that they wish to stay in the EU. The money (business) also backs them up. The result of an exit vote will have absolutely no consequences, especially in the short term, because even if the government got a sudden outbreak of democracy it would take at least a couple of years to disengage from the EU, plenty of time for the government to make sure that the population 'gets its mind right'.
What an 'exit' vote will do is serve notice that the population is watching and that maybe its a bit fed up with the selective application of EU regulations that always seem to favor the money at the expense of the population as a whole. This isn't an EU problem -- its a government problem -- but until there's some kind of political momentum to change it nothing will change, you get nothing by cycles of "no matter who you vote for the government always gets in". Since this government is going full bore to degrade living standards and future prospects of the population as a whole (because that's the best money maker) something has to finally send them a signal to knock it off.
Dublin is a pleasant little city but it is not London. All the advantages listed in this article are persuasive, but I could see HQs relocating to Amsterdam (culturally great, attractive, superb corporate infrastructure, easy transport links, English universally found spoken) for the top brass, and Dublin for the worker bees.
As a city it gets my view over Dublin any day. But you have to consider that while English in widespread there, that's not the whole situation in Holland overall...
More crucially, it would still mean company / corporate lawyers would need to be fluent in Dutch. But most legal depts and executives prefer being able to vet everything (every contract / clause) in their native language.
You can't dismiss that... Otherwise why not also look at Austria / Germany / France / Switzerland etc, as there's a high-degree of English fluency in their capital cities also, and arguably far more workers...
Yes, I live in Dublin and have worked in Amsterdam but it's not as easy for a non native to fit in there as in Ireland without Dutch and the bureaucracy is idiosyncratic.
I also used to live in Scotland. I can see the land border being at Hadrian's Wall, with Scotland hastily joining the EU as fast as Britain leaves and Northern Ireland novating the Good Friday agreement to have Holyrood as one of the guarantors instead of Westminster then doing the same.
I can hear Nigel Farage now "We'll build a wall and make the Scots pay for it"
"I can see the land border being at Hadrian's Wall, with Scotland hastily joining the EU"
I think I see where you are coming from, but a LOT of England is north of Hadrians wall. I can see Hadrians wall from my window. It's an east/west line. The Scottish border is around 60 miles north. Or west. Or anything in between because it goes northeast/southwest.
Newcastle is further north than Stranraer!
you simply hire native legal staff and use native legal consultancy services, of which there is a thriving industry in the Netherlands on account of pretty much every major multi-national having a large office there.
The school system in the Netherlands places a huge emphasis on teaching English, they recently began teaching it to year 1 students.
For commerce, It is normal and common to have two contracts, one in english and the other in Dutch, the English one being as close a translation as can be. There are legal mechanisms in place to facilitate this as they understand that virtually nobody wants to or will learn Dutch considering the limited value and absurd sounds you will be required to make.
Ireland for cheap labour, call centres etc... but the serious stuff can be done in Amsterdam. It is a mjor european hub, very easy to get to from anywhere in europe and easy to live and work in and let's not forget about that lovely 30% tax break that they give skilled foreigners to come to work there.
"... but the serious stuff can be done in Amsterdam."
Interestingly enough, some courts in NL are now happy to deal with cases in English, without requiring translation of documents or interpretation of pleadings. I gather they're also thinking of setting up an English-speaking section at the commercial court in Amsterdam which will purely do business in English. The court fees would be higher than normal, but would easily be offset by the savings on translators and interpreters as well as time-savings.
90 to 93% of the Dutch population speaks English, the only people who tend not to are people over 50, the very poorly educated and young children, English is compulsory in Dutch secondary education:
https://en.wikipedia.org/wiki/English_in_the_Netherlands
TV programes are mostly subtitled British/American as are movies.
Lived here for some time, rarely had a problem communicating in English, as a matter of fact it's hard to learn Dutch because the slightest hint of an accent and most Dutch people switch to English, to the annoyance of many people trying to learn Dutch.
Same in Germany, lived there for a while, most educated people under 30 understand English quite well, typical response to asking if someone speaks English will be "a bit", and they will still be talking to you pretty much fluently 30 minutes later, negotiated a flat rental with the landlady's 12 year old daughter as translator.
There would be very few worries about moving to another European country, they are as keen on new jobs and business as anywhere else.
"More crucially, it would still mean company / corporate lawyers would need to be fluent in Dutch. "
No, most international companies in NL work in English, also for communications between non-English speaking countries. Anyway, there are some very large international law practices along the Zuidas in Amsterdam who do most of their business in English. They would be delighted to help any London-based companies relocating to Amsterdam.
If the only "corporate infrastructure" you need is a brass plaque then Dublin is fine.
If the UK leaves then a majority of the financial institutions HQed in London will need an Eu subsidiary to deal with Europe, and perhaps will need to move their HQ to Europe.
In either case it will mean a brass plaque in Dublin, the workers continue to be in London and the corporate tax that used to not be paid in London will now not be paid in Ireland.
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"[...] so it's rather good for the Irish diaspora in the UK that they get to vote on it."
Exactly who does get the vote in this referendum - even if not a UK citizen?
It appears not only the Irish but also UK resident(?) Commonwealth citizens get to vote. Commonwealth citizens in Gibraltar also get a vote - so presumably do the local Gibraltarians? Some of the aforementioned are actually ineligible to vote in a General Election - but the referendum appears to qualify them as it does for Local Elections and presumably EU MEP elections.
It appears to exclude Crown dependencies like the Isle of Man or Channel islands. UK citizens living outside the UK who have not registered to vote in the last 15 years are also not eligible to vote.
I was trying to distinguish the people native to Gibraltar - much as the Welsh are native to Wales - from people living there from other Commonwealth countries like New Zealand.
Ok - thanks but I am still not sure I get the point or question here.
British Citizens can vote, so the 'natives' in Gibraltar can vote in the same way that the Welsh can. Even English people living in Wales get to vote (and they get to vote in Welsh Assembly Elections).
Be careful when praising the state of the Irish economy; I think it is the only country in Europe that gives equal prominence to its Gross National Product as to its GDP.
Also note that the nominal cost of government borrowing is less relevant in the UK as they prefer to borrow at higher commercial rates for capital projects - its all part of the sharing economy.
"...while any politician will lick their lips at taxes designed to keep money in the UK."
If that were true, why do we have so many laws which get in the way of this?
A: Because based on past events, it can't be true. Our politicians appear to do as best pleases their own investments and those of the companies in which they hold directorships.
I seem to remember in the last couple of years, our politicians even vetoing EU legislation which would have helped stop the tax dodging and capital flow, and are fighting very hard against the EU bringing in a (very tiny, percentage-wise) "Tobin Tax".
I like the speculation in the article, but let's keep it believable, eh? ;-)
'...and are fighting very hard against the EU bringing in a (very tiny, percentage-wise) "Tobin Tax".'
Among the many problems of a Tobin Tax, the main one in this context is that an EU wide Tobin tax would raise most of the money in the UK, and spread it around the EU. No UK government would accept those terms.
So if you want a Tobin tax for other reasons, your best chance is to vote Brexit, then hope that the EU does it unilaterally, then hope that the UK govt follows locally.
But if the EU notices that it is no longer a way to pump money from the UK to the rest of the EU they probably won't bother...
* No matter what happens, Ireland can't do a lot to change any of this. Like Cameron being told to step aside (bad-PR), Irish leaders are not helping either by using scare tactics about the end of the world.
* The real issue to them is the bureaucratic upheaval from all this change. None of them want to have to deal with it, its just human nature. If Brexit happens and I'll be honest I hope it does, there will be adjustments in the near term for sure. But on the whole it will be good for the country.
* Certainly the marketing side will be able to blag about Ireland being the only native English speaking country in Europe. Of course, we know this is toss because many mainland countries have lots of very strong English speakers. But you have to admit its a good pitch to US and Asian businesses on overseas trade meetings.
* There's another factor too. Ireland blocks Schengen business travellers. Most emerging market citizens need a dedicated Visa even to visit. That hurts Ireland as its locked into the CTA with the UK. But all that would simply go away. Whereas at the moment, If the UK blocks a country, Ireland must block it too. So we are losing potential trade partners due to UK bias, and that's not good...
* But the bigger issues are whether Ireland can keep its crooked low corporation tax rate... Whether Cloudy firms believe they can continue to enjoy 'lite-touch' data regulation... And whether Ireland can solve its housing crisis. Which is looking unlikely as we don't have the infrastructure of the UK. In truth, Ireland is not 1st world. Its not 3rd world either, its just somewhere in-between.
* The Government and Central bank have created a market with few real incentives. There's no reason to build anything right now, so everyone is in-waiting-mode. This has caused rents to skyrocket, and many small landlords have even left the market due to red-tape and high taxes!
* None of this takes anything anyway from the London, which is and always will be a world class city. But the differing currency, along with the uncertainty of an exit should play in Ireland's favor. That doesn't mean that London will suffer. It won't! It just means Ireland will win a better share of US corporate inversions and firms from Asia desiring EU HQ's etc.
* But in the short-term it will hurt SME's, importers & exporters and NI cross-border trade arguably the most. But again after the Euro was introduced changes were made to accommodate it, and changes will be made here again. Plus its not like currencies are going to change. Its just new trade agreements and travel agreements that are needed!
I don't really understand the logic of some of the comments on this thread that are implying that Dublin's some kind of remote backwater.
1.) It's very well connected by air, far better than most cities its size and that can quite easily be scaled up as needed either with expansion of Dublin Airport (planned) or possibly even a second airport to the West of the City. At present it's handling more than 25 million passengers, making it the 3rd busiest airport in Britain and Ireland (placing it after LHR and Gatwick) and significantly busier than Stansted, Manchester etc.
Ireland also has huge amounts of connectivity for its size to North America and full pre-clearance arrangements with the US, meaning you effectively land as a domestic flight. Again, that's scalable up without much fuss.
2) Many of you may not realise but, software is no longer shipped in trucks on punchcards. Banking services also don't send cash in trucks or post cheques. So the shipping issues are largely irrelevant. A bunch of diverse fibre routes and excellent air connectivity, both of which Ireland has and can easily expand, is all you need.
3) Culturally, it's almost indistinguishable from England/Wales in terms of business and legal structures. The systems are incredibly similar and the business environment is very similar. On top of that, you've got the fact that the general culture is almost identical too. Moving Dublin to London isn't all that much different from moving from London to Manchester. (Yes, I know I'll have offended a few Irish nationalists with that, but it's fact).
4) It's quite a business friendly environment and the bureaucracy is easy to deal with.
5) There is no language barrier at all for English speakers.
6) It has its own visa system and can prioritise immigration for anyone it likes. This can make recruiting non-EU high end staff very straight forward if we want it to be.
7) It isn't some tiny village with a few sheep. It's a metropolitan area of 1.8 million people and growing extremely rapidly. So, in terms of scale, it's only going to get bigger over the coming years and decades. I don't really see Dublin as all that much different from Amsterdam, Brussels, Antwerp, Rotterdam or any of the Nordic capitals and even the majority of the German cities are all mid sized.
8) If needs be, Ireland can fairly easily scale up ferry connectivity directly to France. It's only about 10-12hours in a faster ferry. At present they're mostly used for holiday makers going each way, but there's no particular reason if we had to improve connections avoiding British 'land bridge' routes that it would be particularly difficult to achieve.
The only huge megapolis type cities in the EU are London, Paris and arguably Madrid. The rest are all clusters of cities in the 1 to 2 million kind of scale and the vast majority of EU cities are actually <1 million.
10) Irish-US political and cultural links are absolutely enormous and deep. It exerts huge soft power in the US, but doesn't go on endlessly about unlike a certain other country in the southeastern med. US presidential candidates still feel the need to embrace their Irish great, great, great granny who happened to visit Killarney in 1747 and Irish political figures have enormous access in the USA because of the scale of Irish-American links.
I wouldn't really underestimate Ireland in any of those areas, it bats enormously above its weight and it has a lot of attractive features for location of businesses and particularly transferring business out of the UK. You're still looking at a huge legal, cultural and language jump to go to the Benelux. Second language English speakers, civil law legal system, significantly heavier and different approach to bureaucracy (Ireland and the UK are much more similar), different media, different culture ... list is endless.
Where Ireland will suffer badly though is more in the areas of non-tech, non-financial, SMEs who have a lot of connectivity to the UK due to physical proximity e.g. small / medium food businesses, small services companies etc. Also it will cause total chaos for Irish and UK companies in Northern Ireland who have been treating the Irish market as a single entity for the last few decades. A lot of intra-juristicaonal business in Ireland will be damaged very badly. That's going to hurt the likes of retail groups, logistics companies, food/drink companies, locally-focused service companies etc etc.
So it's kind of swings and roundabouts, but I think Ireland's at a huge advantage for taking businesses that want to exit the UK post Brexit.
But it is a small place.
I want to move a bank HQ, I need to hire 100traders, 200 derivative quants, 300 programmers, 400 cleaners/rececptionists/HR/etc. I need a choice of 10 corporate law firms, 10 accountants, 10 auditors.
In London or NY I can do this 10x over. In Paris or Frankfurt It is harder, in Dublin / Amsterdam almost impossible. The real reason London will remain as a finance hub is the same reason you open a software startup in SF rather than take the cheaper rent of Idaho.
- Once US-Corp-Inc arrives or the workers anyway, they must deal with a highly dysfunctional transport system, with viable solutions still a long way off. Ireland does not have a good roads system, and what's there does not distribute heavy goods vehicles and buses very well. So in short, hope that you're on the Luas green line with lots of resources around.
- Otherwise expect to frequently wait 3 hours for 3 identical empty buses to show up. Its just poetry! (Think skeletons at a bus-stop)... We have very few lateral bus routes too. Getting around translates into getting stuck in the city center which is a well-recognized disaster. Ask anyone about the recent Luas strikes too, and there will be more stories of pain.
- Ireland is known informally as the Rip-Off-Republic (with good justification). The Irish government (any party) relies heavily on handouts from tax-payers to fund programs. This means, levies on car sales, levies on road usage, levies on insurance and of course greater levies on fuel. But with no real public bus system, cars are absolutely essential. This leads to more congestion and the vicious cycle continues indefinitely.
- How about Amsterdam style travel? No chance! The cycle paths system is just plain dangerous. The roads are just too narrow and trucks and buses don't leave enough room (the former are often slated as serial killers). Cycle paths end suddenly and often put you head on with buses turning left. Statistics show that there is enough cycle coverage overall, but this is highly misleading.
- High rents will severely blunt US-Corp-Inc worker packages, which is ironic considering the ECB is also fighting low inflation. Treat local cost surveys with huge scepticism. Just dining out eats into cost of living in way not seen in other territories.
- Bureaucracy is low? No its not, it just depends on what area you're in and what contacts you have (who you know, not what you know etc)...
All the doom-laden "economic" pitches I hear regarding Brexit seem to be based on the assumption that (a) the rest of the EU will burn their own economies to punish the UK, and (b) the UK will change nothing to take advantage of being free of EU restrictions. A large chunk of European exports go to the UK whereas the majority of UK exports are to non-EU countries, so the EU actually needs to protect that trade to make sure they don't harm their own economies. Should the EU countries take action to make Brexit more painful than it needs to be then there is nothing to stop the UK retaliating by "doing a Switzerland" on financials; offering tax breaks and lower corporation taxes to foreign companies; continue to float Sterling as best for the UK, rather than suffer the Euro's best-for-Germany approach; ditch the reams and reams of EU red-tape and keep our workforce more competitive than Europe's, especially France's. The German's are beginning to realise - too late - that Brexit leaves them carrying the rest of the EU and hobbled by its politics. Ireland could benefit from a Brexit if Ireland negotiates with the UK and takes advantage of EU handouts, but it will always be dependent on keeping one eye on its bigger neighbour, the UK.
IIRC, Ireland's trade with the UK is larger than the rest of the EU, so
"I forget, who is paying the FT to print that "advice" these days ?"
OK, please tell us, since you're so smart. Who?
Incidentally, in my experience the FT print facts and analyses, not advice - they figure their readers are intelligent to come to decisions themselves (unlike the red top newspapers). Just because you don't like the information they present is no reason to doubt their integrity, especially if you can't back that up with facts.
I get the impression that whenever somebody who knows what they're talking about warns that Brexit could have a significant negative impact on the UK the Brexiters simply try to shout them down, instead of presenting counterarguments. They also keep complaining about EU-imposed bureaucracy but rarely support that with examples.
What really p..... me off is that the cherished British tradition of reasoned argument and respect for one's opponents seems to have gone out of the window. How British is that?
>"I forget, who is paying the FT to print that "advice" these days ?"
>OK, please tell us, since you're so smart. Who?
Like all newspapers it prints "those prejudices of the proprietor which don't upset the advertisers."
I looked it up, the FT is owned by the Japanese stock exchange, so possibly more reliable source of news than being owned by Murdoch, but still an organisation with an agenda and "skin in the game" as they say over here.
https://en.wikipedia.org/wiki/British_nationality_law_and_the_Republic_of_Ireland#Access_to_British_citizenship_for_Irish_citizens
See section on 'British born children of Irish citizens' - it includes this paragraph...
"Irish citizens are automatically deemed to be "settled" in the United Kingdom.[11] Since 2 October 2000, this is a more favourable status than that given to citizens of other EU and EEA member states. This special status comes from section 1(3) of the Immigration Act 1971, the legislative basis for the Common Travel Area."
https://en.wikipedia.org/wiki/Common_Travel_Area
Not sure how this pans out in practice but I think it is likely that post possible Brexit we will fall back onto earlier legislation.
Reversion may be possible, but, IMO, to avoid issues with the ROi/NI border, some sort of fudge will be created, but in no hurry.
The original free travel concept was the result of a decision in London, before Ireland obtained independence, because issuing passports to all the Irish in the UK at the time was too expensive and open to avoidance.
You see, that's the wrong kind of thinking right there.
If you're a greedy, power-mad, xenophobic, sociopathic politician perhaps, yes. To the rest of us, the Europeans are our friends and partners, and we probably quite literally could not get by without them.
"the Europeans are our friends and partners"
Well, that 's certainly what Der Spiegel (Germany) and AD (the Netherlands) seem to think, having printed sections of their paper in English asking the UK to stay in the EU, not just because of the economy but especially because of the shared history, values and stability in post-war Europe.
I also get the impression that the Canadians, Australians and Obama/Clinton are giving the same advice. Though admittedly Putin, Le Pen and Trump are advising the UK to get out of the EU. Now, whose advice is more credible?
Oh, and re Boris Johnson's comment that the US wouldn't allow meddling in its internal affairs like the EU allegedly does - he seems to have forgotten that the US is a union of states, a much closer union than the EU. As someone who was an American citizen until recently he should have been aware of that. But apparently, he's not a details man.
Have a good weekend,
H
I've never understood this stuff about the US somehow being opposed to taking part in a union of independent states. The US is exactly that, with bells on - a fully federal union. Surely the USA more than anyone else understands *exactly* what compromise is required to hold a bunch of distinct geographic areas together with large cultural differences between them, and balance powers and responsibilities to an acceptable level.
IMO if we were only a few decades into our history, we'd jump into a USE tomorrow, but since we have so much history collectively we're very reluctant. I can't help but feel this is at the root of the Brexit desire - a creeping suspicion that a United States of Europe is on the cards and we won't get to choose. Personally, I think the way politics is shifting across the continent, a loosening of the union is more likely.
@ H in The Hague
"asking the UK to stay in the EU, not just because of the economy but especially because of the shared history, values and stability in post-war Europe."
Only yesterday I was reading a wonderful piece about how Germany wants us to remain to back them up politically and through absolute fear that the ever growing dissatisfaction in many populations against the EU will cause more to leave. If we leave the president of the EU claims some sort of western breakdown, Cameron claims WW3 and yet a positive reason for the EU has yet to materialise.
"I also get the impression that the Canadians, Australians and Obama/Clinton are giving the same advice. Though admittedly Putin, Le Pen and Trump are advising the UK to get out of the EU. Now, whose advice is more credible?"
I am amazed to watch the facts being countered with 'look look! See who supports our beliefs now!'. Is this XFactor or reality? At what point did we become Obama's poodle (an amusing fear voiced for the remain group)? Is this the UK or the US? Last I checked La Pen was gaining support! What kind of political failure must occur to boost the NF? That would be the EU. The largest bank in Germany predicts good times for the UK if we leave- http://www.breitbart.com/london/2016/06/15/germans-largest-bank-says-massive-uk-grown-brexit-bbc-remainers-silent/
"he seems to have forgotten that the US is a union of states, a much closer union than the EU"
And the EU resembles the USSR more than the US. So what. Are the Germans going to bail out the Greeks? Is the EU suddenly going to group together in a US kind of union because that is quite well resisted at the moment (not just by us). But you are right, that could be the end goal for the EU and their plans for ever closer union. So why dont we hear some positives of the EU and the huge changes it will be going through to deal with its continuing and varying crisis? *its so quiet I could hear a mouse fart*
... Brexit will leave some of those tens of billions looking for a new target. ...
Brexit won't happen. Even if there is an 80% vote in favour.
The Governing group in Parliament make the rules, not referendums. And until there is a pro-leave government party, we can whistle for getting out of the EU.
Brexit will happen but Merkel and Hollande will be in London within a week to offer terms for re-entry.
The loss of the UK market to Germany and France means too much, it won't happen overnight but the imposition of trade tariffs will make business drop off.
Whether we impose tariffs to/from Ireland is an interesting one - in the old days we wouldn't, but Ireland now has to kowtow to the EU. So if they impose tariffs, we will too.
More analysis of the EU trade position here: https://brexit2016blog.wordpress.com/finance/trade-with-the-eu/ and related pages.
"Brexit will happen but Merkel and Hollande will be in London within a week to offer terms for re-entry."
I am not convinced. I think Cameron will do anything to stay on, the EU will come over and negotiate our continued trade but outside the EU (same as before, new title) but at least we can then vote for a government with balls to do what they are instructed to do.
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