FDI flows driving recovery ‘can’t be taken for granted’

Ireland is attracting huge amounts of inward foreign investment, but the country can not take for granted that the flows that helped drive the economy out of crisis will be repeated, a leading economist has warned.

Davy Stockbrokers chief economist Conall Mac Coille said Dublin office space constraints, lingering issues about tax and concerns about Europe’s proposals for a new common corporate tax regime all continue to weigh on a “favourable” outlook.

“Tax is one issue but I do not think it is the doomsday scenario that some have been predicting,” said Mr Mac Coille. “I believe it [CCCTB, common consolidated corporate tax base] is dead in the water. It has little to do with economics, and more to do with politics.”

In research published yesterday, Mr Mac Coille estimated that multinational companies here account for 25% of Irish GDP and 11% of all private sector jobs.

In 2014, foreign firms employed 174,500 people, split between 85,000 in Dublin and 90,000 in other regions.

Dublin has led the way since the crisis in attracting new foreign investments, but now a shortage of suitable office accommodation in the capital could “constrain new investment”, Mr Mac Coille said.

“The strong flow of investments has continued in 2015 but we can’t take for granted that the flow of FDI that drove the economy over the last three or four years will continue,” he said.

“Once again, FDI announcements in 2015 have been biased towards the ICT- information and computer technology sector, with companies such as AirBnB, Amax, Viagogo, and Yahoo making new investments. In addition, Apple announced that it would invest €850m in a data centre, expected to employ 300 people.

“Outside ICT, the financial company, Northern Trust, also announced that it would expand its operations in Limerick, adding a further 300 jobs.

“The pharmaceutical and medical devices sector also features, with companies like ABEC, Bausch & Lomb and Zimmer indicating new investments or expansion of existing activities all outside the capital.”