US businesses want to invest in Northern Ireland due to its unique access to both the UK and EU single markets, but they first want to see stable government restored, said Washington’s special trade envoy to the region on Wednesday.
Joe Kennedy III added that having access to both markets more than makes up for tax rates that are higher than south of the border, where bumper receipts from US companies are powering the economy.
“Taxes are certainly an important calculation for a business community,” Kennedy told reporters on the sidelines of a conference in Belfast. “So is talent, so are employees, so is quality of life, so are the other services that can be provided.
“My point is Northern Ireland has an awful lot to offer,” he said. “If it didn’t, you wouldn’t see 230 American companies here. They chose to be here. They didn’t have to choose to be here — they did.”
US companies employ 30,000 people in Northern Ireland and include high-profile tech firms such as Seagate. A third of the world’s computers include Seagate components and half of those are made in Northern Ireland, he said.
Ireland’s remarkable economic progress in recent decades has been built on huge investment from US tech and pharma companies, in part lured by Ireland’s 12.5 per cent corporate tax rate.
Their payments powered a 48 per cent surge in Ireland’s corporation tax receipts last year to almost €23bn.
Ireland’s corporation tax rate will increase to 15 per cent under a yet-to-be implemented OECD deal but that will still be 10 points lower than the UK rate, which this month rose to 25 per cent from 19 per cent.
Kennedy, appointed last year by Joe Biden, arrived in Belfast with the US president last week and has been talking to firms and business groups in Northern Ireland “to say what do you need? What industries do you want and which companies do you want to target? Which CEOs do you want to go in front of?”.
Michelle O’Neill, Northern Ireland’s first minister-designate, told business leaders last month that “investment, investment, investment” was the talk of St Patrick’s Day celebrations and she wanted Kennedy to drum it up.
But Northern Ireland’s power-sharing institutions are on hold because of a boycott by the Democratic Unionist party over post-Brexit trade rules.
UK prime minister Rishi Sunak appealed directly to the DUP to restore the institutions, saying: “I urge you to work with us to get Stormont up and running . . . I’m convinced it is the right thing to do for our union.”
Brexit left Northern Ireland in the EU single market for goods and put a customs border in the Irish Sea. The DUP, the region’s largest pro-UK party, says Sunak’s recent Windsor framework, designed to smooth implementation of the rules, does not fully address their concerns.
“If you’re going to talk about making investments of thousands of employees, millions, tens of millions, hundreds of millions of dollars . . . links into government are important,” Kennedy said.
Northern Ireland has some of the lowest productivity and highest social deprivation in the UK. It is an issue that US investment has tried to address in the past, including at the height of the Troubles in the late 1970s when John DeLorean tried to build his Back to the Future cars. The project quickly went bust despite £77mn of government funding.
Kennedy nonetheless expected Northern Ireland to prove an attractive destination that could lure companies already established in the republic to expand north.
“I’m not talking about stealing investment away from anybody,” he said. “There are companies that have bases in the Republic of Ireland that I think would be interested in trying to potentially explore opportunities in Northern Ireland. Even companies that already exist in Northern Ireland that are looking to expand their own existing footprint here.”
