Ireland’s Post-Brexit Mistake

by Cormac Spencer, Consultant and Director with Link Personnel Services

The result of the referendum vote in Britain on June 23rd 2016 was a surprise – No doubt at all. Yes, the news caught an awful lot of people off guard. Though they protested they had planned for every eventuality, the people who should have, didn’t really have a plan for “Leave”. Some people did have a plan. On the day after the vote, the cities of Paris and Frankfurt had mobile ads across London enticing business to avoid disruption and move to those cities which, they claimed, could provide a stable base in the EU. “Come on in”, the ads screamed, “the water is great”! In the year that has followed, Britain has realised that it will need more time to fully disengage with the EU, though it is still very much undecided as to what the post Brexit arrangement will look like. It still doesn’t really have a plan! This is adding to uncertainty for firms still based in Britain, and is increasing the chances that they will indeed need to look for a new home.

In that period of time, though some progress has been made in attracting jobs here, Ireland’s post-Brexit plan has failed to implement the changes required to attract more investment. Frankfurt and Paris, who have had their noses in front from the start, seem to be benefiting much more. Why? In part it is because of a stated desire to not upset our largest trading partner, but in large part it is because we are failing to create the conditions that can handle an influx of jobs. For years, Ireland has seen our low Corporate Tax rate as the corner stone of our pitch for foreign investment. No doubt, it’s a big attraction, but as a country we have ignored the other factors big companies have repeatedly said encourage them to locate in a particular country. First and foremost, companies look for access to skilled employees. Those employees, in turn, like access to good transport (on the ground and in the air), affordable and high quality housing, and good schools (which teach an international curriculum). They also like competitive personal tax rates. On all of these fronts Ireland needs to do better if we want to substantiate our claims that we can attract and easily absorb those companies and their staff looking for a new home.

In housing, we are faced with double digit increases in rental and mortgage costs year on year while renters have to fight off fierce competition just to find suitable digs in the first place. Though the LUAS link up is a welcome improvement to Dublin’s transport infrastructure, we haven’t moved fast enough to modernise our public transport offering to keep pace with other countries. There are very few schools in Ireland which teach the International Baccalaureate, though second level education standards overall are quite high. Finally personal taxation levels are high. The government is now addressing this by promising to increase the level at which the top income rate of tax is paid. Currently PAYE earners hit the top rate of tax after €33,800 – much lower than our European peers. Ireland is a natural home for companies and employees in Britain who are facing uncertainty. We have a stable political climate, we are English speaking, we are firmly in the EU and we have a great social scene, but if people think they will pay more and be taxed more and get less in terms of services, its natural they’ll think twice. We must appeal to the head as well as the heart when promoting Ireland.

It’s understandable to be shocked in the days after Brexit, but 15 months on, we have to get a handle on these issues. When you think about it, these problems may not only discourage people and companies from coming here, but they might encourage those already here to leave. In 5 years the opportunity presented by Brexit will be gone. We will have waved goodbye to all that extra investment, all of those jobs and all of the revenue which we could have used to better educate our people and better look after our country, to lower unemployment and to transform our economy and country into a world leader on so many fronts. The stakes are high, and the game is being played now. We have to do much better.

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