A British exit from the European Union would represent a major challenge to Ireland, the director of IBEC said on Tuesday in Brussels.
Speaking at the launch of a policy paper on the EU’s priorities over the next five years Danny McCoy said that Britain was “by far Ireland’s biggest competitor” for foreign direct investment.
"A big worry for Irish business is that there may be a migration of business to the UK if they get a lot more flexibility," he said, warning that Britain could become "a sort of Singapore on our doorstep."
Britain is “playing Ireland at Ireland’s game” in terms of actively encouraging foreign direct investment, he said. “They are by far our biggest competitor, and are very aggressive in terms of attracting business,” he said, highlighting the UK’s tax credit and patent box systems.
Ireland’s high level of income tax could also encourage business and executives to relocate to Britain, he warned. “We’ve left ourselves hugely exposed on the income tax side. Our income tax system is quite punishing for high income people, particularly people with share options.”
On the British government's announcement last week that it plans to devolve corporate tax competency to the Northern Ireland executive, Mr Mc Coy said he was in favour of a 12.5 per cent corporate tax rate for Northern Ireland, he said the "spill-over effect" of such a move would be a positive for the all-island economy.
Earlier, the Secretary General of the European Commission Catherine Day highlighted the EU-US trade deal as one of the key priorities of the new European Commission, stressing the need to communicate the advantages of an agreement.
“I think it’s very important that we turnaround the negative public perception that has been built up on TTIP (Transatlantic Trade and Investment Partnership), but also more generally about other trade agreements. We need to find a way to explain to people that the jobs are not going to come out of nowhere,” Ms Day said.
The European Commission began negotiating an ambitious trade deal between the European Union and the US last year, but the proposed deal has lost public support in some member states.
The EU trade commissioner Cecilia Malmstrom is currently in Washington to meet US negotiators on the trade deal. Last month Commissioner for Agriculture Phil Hogan warned about the progress of the negotiations, questioning whether the United States was serious about doing a deal in 2015.
IBEC reiterated its support for the EU-US trade deal, which it claims could boost GDP by €275 billion. “Trade deals are always difficult, but the advantages for Ireland, particularly in the services sector, would be enormous. “ Mr Mc Coy said.
