Ireland's Economic Rebound Facing Threats, Including a Brexit

While Ireland’s recent strong economic performance is reason to celebrate on this St. Patrick’s Day, there are numerous headwinds facing the country that could threaten future growth. One of those risk factors is the threat of the U.K. leaving the European Union, according to Marian Harkin, a member of the EU Parliament. “If there were to be a Brexit, there would be a huge dislocation,’ said Harkin. ‘About one billion a year. That’s the level of trade between Ireland and the UK. We export more to the UK than any other country.’ Ireland’s other major export partner in the U.S., and Harkin said those strong export markets helped Ireland’s GDP grow by 7.8% in 2015. That’s the highest level of growth since 2001, and comes just a few short years after a financial bailout from the International Monetary Fund. Keeping that growth going is challenging, as European economic growth overall has slowed. Harkin said it’s hard to say if the latest stimulus actions by the European Central Bank are enough, and in some ways, ECB Chief Mario Draghi’s hands are tied. ‘I was reading something very interesting the other day. They described the ECB as the Starship Enterprise, and they described the European banks as the Klingons, those who are clinging on to money.’ Harkin said that while Draghi is trying to encourage lending, ‘there’s only so many tools in his arsenal. And people are beginning to wonder, is this enough?’ Harkin also addressed the contentious issue of tax inversions, where U.S. multinational corporations have sought to domicile in Ireland to take advantage of a lower corporate tax rate. ‘I think what multinationals do is they exploit the mismatch between different tax systems in different countries,’ said Harkin. ‘At the European level, we do need to ensure that multinationals pay a fair share of tax,’ said Harkin ‘But equally, what we have to be very careful about is, we don’t price ourselves out of the market.’ She also commented on the ongoing investigation into Apple’s(AAPL)tax payments in Ireland, saying while the European Commission had hoped to conclude its investigation late last year, now the Commission is saying ‘don’t hold your breath.’