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Upbeat drumbeat

February 16, 2011

By Staff Reporter

“There is even some talk doing the rounds that the Celtic Tiger is making a return visit to these shores,” he said in a speech at a lunch in his honor at the American Chamber of Commerce in Dublin. Ireland’s Celtic Tiger decade in the 1990s saw unprecedented economic growth, which finally tailed off in 2000.
“Over the past few weeks the prospects for the Irish economy have brightened. Investment flows are picking up, unemployment is falling, tax revenues are running well ahead of targets,” Ahern said, and offered the projected growth as vindication for his government’s spending curbs, and an affirmation of Ireland’s social partnership between the government, employers and the trade union movement.
“Growth forecasts for this year are being inevitably revised higher with reports in recent days suggesting that the economy will expand by an impressive rate in the region of 5 percent this year,” Ahern continued.
If “Ulysses” could have been the blueprint for a recreated Dublin, the Irish economy’s basis is American investment, most recently in evidence with Intel’s $2 billion investment at its Leixlip plant. The U.S. remains the single largest source of inward investment in Ireland with almost 90,000 Irish people employed by about 570 American companies.
Ahern’s upbeat assessment has received broad assent by analysts, and a Pricewaterhousecoopers report this month said the Irish economy could expect 3.5 percent growth in 2004-2005, well ahead of an anticipated European Union average of 1.5 percent. Allied Irish Bank’s Global Treasury’s assessment published Tuesday also predicted renewed growth, though in keeping with Ahern, any mention of the Celtic Tiger’s return has been heavily qualified.
But while Ahern’s main theme was the importance of American investment, he also stressed the need for renewed commitment to Ireland’s social partnership. “It is incumbent on all of the social partners to recognize that its success has always involved engagement and compromise,” he continued, noting that Ireland can no longer rely on being an attractive investment because of cheaper labor costs — the newest members the EU such as Poland and the Czech Republic are already more competitive in that regard.
Social partnership, Ahern said, “at its core . . . has always been about the subsuming of sectional positions to the national interest.”
Also speaking at the lunch, Joanne Richardson, chief executive of the American Chamber, stressed the elements that she said still make Ireland an attractive location for U.S companies.
“The competitive dynamics have changed considerably with the enlargement of the European Union but Ireland’s pro-business environment, our favorable corporation tax rates and the strong base of U.S. companies already here, all contribute to the strong business case for continued U.S. Investment in Ireland,” she said. “Intel’s $2 billion investment in [its new Leixlip plant] Fab 24 is a strong vote of confidence in Ireland as a location for significant value add investment and confirming our position as one of the best locations for software manufacture in the world.”
Ahern now faces a struggle to resist harmonization of EU corporate tax, which would bring Ireland’s low tax rate into line with the higher rates in larger EU states. But he said the issue would likely be replaced by the continuing debate about the European constitution in the coming months.
He resisted calls for cuts to income tax, saying that Irish citizens already enjoy very low taxes, and taxpayers cannot expect to have “Christmas on most days of the week.”
Forecasts this week also indicated an easing of the strong euro against the dollar, falling by 2005 to below $1.20.

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