All the signs suggest multinational investment in Ireland and the State’s corporate tax receipts are going to continue to grow despite concerns to the contrary, former chairman of the Irish Fiscal Advisory Council Seamus Coffey has said.
Mr Coffey was taking part in a panel discussion at the MacGill Summer School in Co Donegal on Friday on the question as to whether a global recession is inevitable, and what the consequences for the Irish economy and world trade would be in that event.
The Central Bank warned in recent weeks that as much as €8 billion, or just over half of the Government’s corporation tax receipts, might be “unsustainable” or at risk due to its concentration among just 10 large multinationals.
However, Mr Coffey argued on Friday that multinational investment in Ireland is “just as likely to continue to rise as it is to fall”.
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“Over the past 10-15 years, there have been frequent portents of doom that many tax changes or corporate restructurings were going to lead to a withdrawal of investment from Ireland,” he said.
“Each and every time, the opposite has happened. There has simply been more investment. We are continuing to see large multinational investment.
“If you go down to Cork City and drive around the outskirts, every so often you pass what was once a farm but is now a multibillion euro pharmaceutical company.
“These companies have put in one, two, three, four billion dollars into a facility with a 10-12 year manufacturing cycle. Those plants are coming on stream now, so they will be in operation out to the 2030s, and they will need to be staffed.
“Is there a threat from that concentration? Possibly, but all the indications are it is going in a positive direction.”
Speaking on the same panel, Ibec chief executive Danny McCoy said the current inflationary pressures in the world economy could be traced back to the initial onset of the Covid-19 crisis. “Too little is being diagnosed in what happened at the start of Covid,” he said.
“We all believed that the right thing to do was to pump money into the global system to keep people liquid, keep them at home, and get through this very temporary couple of weeks or months.
“It was gargantuan, the scale of that. Just to use one metric from the Fed, of all the US dollars ever created, 40 per cent were created during those six weeks. That’s in history.
“The scale of the money put into the global financial system has been gargantuan, and it was left in the patient for too long, for two years.
“The consequences of that against a world that is driven by intangible assets can be seen by those tech companies who trebled in value during the past two years.
“But it wasn’t just in those corporations. The scale of this money has found its way into households right around the world. There is still way too much money in the global system. Central banks globally have been slow to react to that problem.
“However the fundamental is that the scale of money still in the system has given rise to excess demand everywhere globally right now. Excess demand comes in three forms: prices moving, rationing, and scarcity.”
