Budget 2020: Prudent approach in light of Brexit outcome uncertainty

Budget 2020: Prudent approach in light of Brexit outcome uncertainty
Martin Shanahan is the chief executive of IDA Ireland

It is important to consider, in the first instance, the context of this budget.

Understandably, Finance Minister Paschal Donohoe has taken a prudent approach in light of the ongoing uncertainty regarding the outcome of the Brexit negotiations.

There are several welcome developments in the budget from a foreign direct investment perspective.

A solid and stable budgetary regime is key for foreign direct investors: They want any country they are considering investing in to effectively manage its public finances.

An important part of that stability lies in Ireland’s competitive, transparent and pro-business corporation tax regime.

This remains central to Ireland’s economic development.

Mr Donohoe’s restatement in a budgetary context of Ireland’s commitment to the 12.5% rate is, therefore, very welcome.

Foreign Direct Investment is a vital part of the Irish economy.

IDA’s latest results show that IDA clients account directly for 10% of total employment in Ireland, representing a vital economic contribution by the multinational sector.

Some 58% of that employment in IDA client companies is located outside of Dublin.

IDA secured 265 new investments in 2018, including 134 companies investing in Ireland for the first time, 73 expansions by established companies, and 58 R&D investments.

Total employment in IDA client companies reached 229,057 in 2018 — the highest number ever employed in the multinational sector in Ireland.

IDA’s performance in the first six months of the year points towards 2019 being another successful year for Ireland winning foreign investment in a highly competitive marketplace.

Competition for foreign investment continues to be fierce and will become even more intense post-Brexit, with every investment agency in the world competing to win mobile investment.

Measures announced in the budget to progress the already published Corporate Tax Roadmap, in line with international commitments, are welcome.

Enhancements in research and development (R&D) tax credits will benefit our small and medium multinational companies and the minister’s reaffirmed commitment to SARP, or the Special Assignee Relief Programme, are further positives in this budget.

So too are the additional resources allocated to housing, education and infrastructural development.

These combined measures will strengthen Ireland’s offering as a more competitive place to sell internationally.

IDA Ireland also welcomes Business Minister Heather Humphreys’ announcement of a €110m no-deal Brexit emergency support package which will be available to eligible client companies of the enterprise agencies.

- Martin Shanahan is the chief executive of IDA Ireland

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