Analysis: Cork should look to tap financial foreign direct investment

Anyone who has been through Dublin in the past couple of months will be keenly aware of the infrastructural squeeze that is taking place as the economy rebounds.

That challenge cannot easily be fixed given the geography of the capital (it sits on a large bay) and the strong growth evident inside the Pale.

If Cork, Limerick, and Galway had the luxury of employing strategists, they would be eyeing up developments in the east as a glaring opportunity to advance the case for these cities to be the focus point of inward investment.

Among the sectors they should be exploring is financial services.

A recent piece of analysis in the Financial Times profiled the scale of employment by financial services companies in the London area.

These institutions have large volumes of employees who provide so-called back or middle office services that do not have to be in the same location as their customers.

In total, 14 investment banks have no less than 65,000 employees in London, the 12th most expensive city in the world, and the most expensive within Europe.

One source is quoted saying that 10 of the 12 biggest banks are actively exploring the option of shifting employees to a more competitive cost centre.

I was reading that while sipping a coffee off St Patrick St in Cork and thinking about a few pertinent facts.

Firstly, these banks all work in the English language, which all of us in Ireland use, a unique point within the vast eurozone.

Second, I am drinking coffee a mere 40 minutes flying time from the heart of the London financial centre and a nanosecond away from it in the internet cloud.

Thirdly, I was sitting somewhere that offers a 12.5% corporate tax rate that has attracted asset management back offices to the financial services centre in Dublin’s docklands in the past two decades.

Lastly, property in Cork trades at a material discount to London, making it economically attractive to employees and employers alike.

All these factors suggest a huge opportunity exists to promote Cork, Limerick, and Galway as centres that could attract mobile financial services work.

Rapid advances in communication technology make that vision even more attainable.

An acquaintance of mine runs a highly successful global aircraft leasing company from Ireland.

He recently gave me a demonstration of an advanced IT communications system he installed, and it was like something out of Star Wars.

Imagine a sales person working in Beijing.

He or she can, using their mobile phone or tablet, appear live on a screen in head office to provide instant and unbuffered contact with colleagues and managers.

Moreover, data-rich files and charts can be exchanged simultaneously to deliver secure content-rich business discussions.

My friend uses this infrastructure to conduct weekly meetings with multiple salespeople around the world.

That system was just a dream as recently as 10 years ago.

Now consider applying that framework around the investment banks in London who are desperate to improve the efficiency of their businesses.

Is it beyond the realms of possibility that we could convince one or more of these employers to shift 1,000 jobs or more to Cork?

That would give the entire economy around Cork a valuable nudge along its journey of recovery.

Those charged with running regional Irish cities have to step up to the plate too.

More connections from Cork or Shannon airports will always be welcome.

Traffic bottlenecks in places such as Mahon and the Jack Lynch Tunnel need attention.

Nonetheless, the scope to grow is clear and obvious.

That potential could be even embellished if the so-called ‘Brexit’ unfolds this year.

Although many fear such an outcome, remember Ireland would be left as the only English speaking country within the eurozone if the UK left, while Britain will want to keep as many trade links open with Europe as possible.

Instead of endlessly fretting about the UK’s relationship with Europe, we should focus on leveraging such an event for our own benefit.

Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.


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