Ireland should remain attractive even after Apple windfall – global ratings agency
Ireland should remain an attractive location for multinationals even if the State were to ultimately take up to €13bn in takes from Apple, global ratings agency Fitch has said.
The risk of increased uncertainty over Ireland’s attraction to global businesses, potentially damaging foreign direct investment and employment, is “limited”, Fitch said.
But it said the ruling could add to the uncertainty surrounding the Brexit vote, which it believes will hit exports and investment. It also expressed concern that divisions within the coalition “have become more evident”.
Fitch said that if upheld, the ruling from the European Commission would represent a “one-off fiscal windfall for Ireland”, and could speed up the improvement in Ireland’s public debt position if used to pay down debt or reduce borrowing.
“It is possible that any such benefit would be partly offset by increased uncertainty over Ireland’s attraction to global businesses potentially damaging FDI and employment,” Fitch said in a note.
“We think this risk is limited. Ireland’s low 12.5pc corporate tax rate, and its high human development and governance indicators should keep the business environment attractive to multinationals, and the costs of relocating would be large.”
Following the ruling last week, Finance Minister Michael Noonan suggested appealing the decision was the best course of action, suggesting taking the money would be “destroying the future for people for short-term advantage”.
IDA chief executive Martin Shanahan said the Commission decision was unhelpful for Ireland and Europe, and has made “it much more difficult for Europe and Ireland to attract foreign direct investment”.
The ratings agency said the ruling could add to the uncertainty surrounding the Brexit vote, which it forecasts will slow export and investment growth.
“Notwithstanding the government’s repeated announcements to appeal, including a cabinet decision on Friday to formally lodge an appeal against the European Commission, divisions within the coalition have become more evident,” the Fitch note said.
“This shows the challenge that the Fine Gael-led minority government faces in formulating and enacting policy. It has already been outvoted in parliament on some minor economic issues since its formation in May. A more unstable political backdrop would add to fiscal and economic risks.”
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