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An Irexit? October 13, 2016

Posted by WorldbyStorm in Uncategorized.

Wolfgang Munchau writing in the Irish Times, notes that along with the UK:

There is another country in Europe with an unsustainable business model: Ireland. It offers low corporate tax rates and legal tax avoidance to foreign investors. The ruling by the European Commission to force Apple to pay €13 billion to the Irish Government in taxes is a sign that this model may not be sustainable for much longer. Brussels is also pushing towards a harmonisation of the corporate tax basis – the rules of what to tax.
Dublin has been resisting such a change, but with the UK out of the EU it will lose an ally in the fight against EU-imposed tax harmonisation. Ireland has done well from its tax haven status. But this model is unsustainable.

That’s a fair enough point. Though…he immediately skips to the following:

Perhaps the confluence of Brexit and the long-term loss of a business model will persuade Ireland to follow the UK out of the EU. This will obviously depend on whether Ireland can find an alternative model inside the EU. It is possible, but not inevitable. An Irish exit will not happen unless and until there is more clarity of the costs of Brexit. It will also depend on whether the euro zone successfully manages the various crises facing it.

He continues:

If all this develops as I expect – badly – the economic case for an Irish exit would strengthen. Ireland might choose to stay in the EU for political reasons. But those in Ireland in favour of EU membership should give some thought to what could go wrong. They might otherwise end up in the same place as the overconfident Remain supporters in the UK: bitter and without influence.

The problem is to what purpose? What ‘model’ would Ireland adopt in such a context that would be superior either to alignment with EU norms or (in the very short term) the status quo (or more likely an adjustment of the status quo where, whisper it, Ireland would receive precisely what it expected from such corporations and businesses publicly in tax). Because one immediate consequence of the UK departing the EU is the fact that Ireland is now an obvious entry port for anglosphere corporations to conduct business in the EU, as it has been, but without the inconvenience of the UK as a rival to the immediate east. But how does it work with both the ROI and UK outside the EU? Which economy is better placed to deal with that?

Of course it could be that that is too nebulous a thing to provide any great advantage. We will see. Munchau himself notes that in relation to the UK itself:

So we are about to witness a shift away from an old unsustainable business model to something new. We should not pretend that this will be cost-free. The overt xenophobia at last week’s Conservative party conference may end up driving the very foreigners away the UK can least afford to lose.

Where do they go? Some to the continent. Some to Ireland. But go they must. We have to shift away from the model we currently have. But his suggestion seems premature in the extreme.


1. Michael Carley - October 13, 2016

Eireamach surely.

Liked by 3 people

2. EWI - October 13, 2016

God knows I don’t love the modern, neoliberal EU which replaced the relatively benign EEC. But it’s only a measure of the craveness of Irish politicians, the instinctive need to tug the forelock to London in some quarters, that sees mad schemes (like this Brexiteer kite-flying on our becoming part of the UK immigration regime) not get laughed out of Dodge like a self-resoecting sovereign Republic ought to.


Ivorthorne - October 13, 2016

I think that the idea of Ireland as being a posy-Brexit immigration point to the UK is just window dressing. Ireland won’t change what it does but the notion of enhanced controls at entry points gives the Brits a fig leave that allows them to keep an open border for NI.

Liked by 2 people

WorldbyStorm - October 13, 2016

Interesting point IT. Sounds very tenable.

EWI, I’ve had precisely the same thought, that there’s an heap of forelock tugging to the British in some of these arguments – granted not Munchau, but Tom McGurk would be one, and there are others. It’s as if no way can we actually make a decision outside of their orbit.


3. gendjinn - October 13, 2016

“– Copyright The Financial Times Limited 2016”

Sometimes it’s good to skip to the end.

Liked by 1 person

WorldbyStorm - October 13, 2016

Very fair point.


Pasionario - October 13, 2016

I think you’ll find Munchau is one of the FT’s more eclectic commentators. He wrote an op-ed last week about how the BLP’s shift to the left could do them good:


“My expectation is that politics will adjust to economic needs, as it did in the 1980s, this time in the other direction. There is a chance that it may end up like the 1930s. This is hard to foretell. What I am certain of is that the overwhelming consensus in favour of centrist libertarian economic polities is breaking down, and that will have an impact on how we come to regard leaders like Mr Corbyn.”

He’s not actually defending Ireland’s model in this week’s piece, merely arguing that we may have to choose between EU membership and being a tax haven for international capital. The clash over Apple gives an idea of the shape of things to come. Our leaders are going to have difficulty choosing between the two kinds of fealty that have dominated Irish economic policy over the past fifty years.


WorldbyStorm - October 13, 2016

Absolutely, I usually like his stuff because it does have a good line. But while I take your point that he’s not defending Ireland’s model, I hope I didn’t give that impression, I think he overstates our inability to find a path through this. Hence my point as regards actually demanding corporations pay the amount of tax they’re publicly required to rather than paying absurdly less. That alone would be a significant step forward. And as for the further future well that’s an imponderable. I don’t think that Ireland outside the EU, flawed as it is, is a better bet (again, the simple fact of the proximity of the UK is problematic in that regard).


sonofstan - October 13, 2016

People here in England have a very simple view of Ireland’s recent economic history: we got rich cos of loads of EU money then we enticed US firms over with tax incentives, then we spent it all because we are after all feckless paddies and we’ll be fucked when the Brits leave the EU because we can’t look after ourselves and have no entrepreneurs, except for Michael O’Leary.


Joe - October 13, 2016

In fairness, they’re not far wrong.
we got rich cos of loads of EU money – check
then we enticed US firms over with tax incentives – check then we spent it all because we are after all feckless paddies – sort of check, we made a bollix of it for whatever reason
and we’ll be fucked when the Brits leave the EU because we can’t look after ourselves – we’ll see, the rest of the EU might bail us out to teach the Brits a lesson
and have no entrepreneurs, except for Michael O’Leary.- ffs, completely wrong, haven’t the Brits never heard of Denis O’Brien and Michael Lynne and all the rest of our great entrepreneurial entrepreneurs

Liked by 1 person

sonofstan - October 14, 2016

I used to think the entreprenooor fetish was an irish thing, but it’s way worse here, as is the utter reverance for ‘business’.


gendjinn - October 14, 2016


where does the value of our fisheries figure into your calcs?


gendjinn - October 14, 2016

This was the first article I’d read by him and wasn’t that impressed.

“… may have to consider …”

Or may not have to. Or having considered it, decide against. Calorie free words in the title set the interpretive tone…..

Germany & Japan did not reinvent themselves, they were stood up as allies in the cold war. Germany’s economy rebounded because Nazi gold was allowed to flood back into it from overseas & the Allies poured support in. Japan’s economy was stood up by American investment and support. Both places were leveled. It wasn’t ingenuity or necessity it was money.

Is Ireland really so dependent on the largesse, or more accurately the minutesse, of FDI to survive? That without it things will be so bad that leaving the EU would be better?

I got the feel from the article that the UK is afraid to take the journey into the unknown alone and wants an Irish security blanket along. Any Ireland outside of the EU dependent on the UK economy is going to end up in penury, servicing the SE of England.


4. dublinstreams - October 13, 2016

http://www.ireexit.com/about “We are a centre leaning political group who believe the time is right for Ireland to hold a referendum on our continued membership of the European Union”. can you lean to the centre? I

Liked by 1 person

Aonrud ⚘ - October 14, 2016

I don’t think you can, DS. They must be upstanding citizens 🙂


ejh - October 14, 2016

It’s time to take back control of our Country.

Uh huh


5. FergusD - October 14, 2016

Just a bit of an off the wall thought. With all the xenophobic rhetoric (and perhaps action) in the UK, which seems to result in increased support for theTories in the polls, how does that fit long term with the neo-liberal maxi free market, not import controls and tariffs mantra of Liam Fox etc? It seems to me that an anti-immigration, xenophobic mood is better suited to protectionism, which would also be a better fit with the increasing disenchantment with neo-liberalism among many. Similar trends are apparent in the EU. Could we see a drift to protectionism? After all it is what happened in the 1930s and a lot of other trends are reminiscent of that time e.g. war mongering, tension between “major” powers.


Michael Carley - October 14, 2016

They might have no choice but to resort to protectionism. If the banks feck off to Frankfurt, there’s little left in the economy (bar food, oddly enough) so they’ll have to protect what they have.


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