Irish Finance Minister Brian Cowen and Peter Robinson, deputy leader of Northern Ireland’s Democratic Unionist Party, who holds the finance brief in the Stormont administration, have unvei
Irish Finance Minister Brian Cowen and Peter Robinson, deputy leader of Northern Ireland’s Democratic Unionist Party, who holds the finance brief in the Stormont administration, have unveiled plans that could potentially see work from financial services firms based in Dublin carried out north of the border.
But despite the backing of Cowen and Robinson, who will take over the top jobs in their respective governments from Bertie Ahern and Ian Paisley respectively in the course of the next two months, the use of the word ‘potentially’ to describe the proposed transfer of financial services jobs to Northern Ireland indicates that the projects still has various hurdles to surmount.
As one economist notes, the political benefits of the financial services sectors of North and South moving closer together has little relevance to industry members. Financial services companies, especially fund administrators, are in Ireland for one major reason – low tax. However, the plan envisages that firms established in the Republic can establish offices in Northern Ireland to help them cope with the current skills deficit in the South.
A company will generally relocate or outsource to another country because the move is of benefit to it. For a fund administrator in Ireland to forego a corporate income tax rate of 12.5 per cent, there must something of greater value on the other side. Will skills, and perhaps lower costs, do the trick?
Another potential stumbling block is the ‘minimum activities’ rules for International Financial Services Centre jobs, which require fund companies to maintain a certain amount of its activities within the republic. This is understood to be under review by the industry regulator, Ifsra.
For all its good intentions, the initiative may be nothing more than an announcement. Whether financial service providers will actually transfer part of their operations to Northern Ireland will depend strongly on whether they will be able to make significant savings – perhaps an unlikely scenario.
