The Trump presidency is is a bigger risk to the Irish economy than Brexit and EU Tax Challenges, the boss of one of Ireland’s biggest accounting firms has said.
Managing partner of Mazars, Mark Kennedy, told the student-run Trinity Economic Forum that the risk to foreign direct investment posed by US protectionism would affect Ireland.
He said: “There is no doubt that large reductions in the US corporate tax rate will reduce the incentive for companies to locate activities outside the US, including in Ireland. Our dependence on US FDI is illustrated in the flows of direct investment into Ireland.”
He pointed to CSO data which showed in 2015 that €100bn of the €170bn of FDI in Ireland came from the US. More than 140,000 people are employed by US companies in Ireland.
Mr Kennedy said there was still time to combat what may lie ahead.
“The good news is that we have time to react and plan. In the short term, the sunk costs of existing multinationals based in Ireland mean that our FDI economy would be slowly changed rather than seeing a dramatic rush to the exit. Now is the time to refocus our energies on competitiveness and on developing other incentives to make Ireland an attractive investment location for investors from the US and elsewhere,” he said.
Mr Kennedy’s comments come as the latest CSO figures showed mixed results in production for manufacturing industries. They showed that in the three-month period October to December, manufacturing output was up 3% on the preceding three-month period. However production was 12% lower in December itself from November, while it was almost 2% lower for the whole year.
The CSO said there was no change to the seasonally adjusted monthly services value index in December 2016 when compared with November 2016. However, in the year to December 2016, there was an increase of 9%. The year-to-year comparison showed big increases in information and communication at 30%, as well as wholesale and retail trade which was up 7%.
Meanwhile, growth in Britain’s services sector slowed for the first time in four months in January as businesses battled the sharpest rise in their costs for over five years. The Markit/CIPS services purchasing managers’ index dropped to 54.5 from December’s 15-month high of 56.2.
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