DUP leader Arlene Foster resorted to familiar tactics this week as she dismissed a chorus of calls for the UK to abandon plans to exit the EU without a deal in the face of yet more catastrophic forecasts.
During the campaign ahead of the UK’s referendum on EU membership in 2016, Brexiteers would frequently swat away warnings about the damage leaving the bloc would cause by claiming it was all part of a Remain plot they dubbed Project Fear.
The idea was simple. Convince the electorate that Remainers were sowing fear of the unknown for their own ends with greatly exaggerated claims of doom and gloom that simply ought to be ignored. The British public bought it.
This week, perhaps sensing the weight on London’s shoulders of the growing warnings surrounding a no-deal Brexit, Foster returned to the tried and trusted trope. Taoiseach Leo Varadkar was involved in “Project Fear, Mark Two”, she said.
Varadkar, for his part, rejected the claim, but pointed out that a no-deal Brexit is indeed something to “be afraid of”. “A no-deal Brexit would have very serious impacts on the economy North and South and in Britain. It could have security implications as well and it could have constitutional implications,” he said.
A leaked UK government document made for sobering reading. A no-deal Brexit, it said, could cause cross-border agriculture trade in Northern Ireland to “virtually stop” within 24 hours.
The document also said a no-deal Brexit could trigger “consumer panic”, food shortages and an increased security threat within a fortnight. It also said Northern Ireland may face law and order challenges.
Separately, the Central Bank, in what was its starkest warning to date, said a no-deal scenario could cost Ireland 34,000 jobs by the end of next year and potentially more than 100,000 over the medium term. The figures were a significant mark-up on previous projections.
The British government announced plans to set aside an extra £2.1 billion (€2.3 billion) for preparations, including stockpiling of medicines, an extra 500 border officials and a public awareness campaign about disruption.
As for the much vaunted post-Brexit UK trade deal with the US, Richard Neal, the head of the US congressional committee responsible for trade policy, warned Britain that a trade deal with the US will not happen if the Belfast Agreement is jeopardised.
"He needs to be reminded that this is not about a return to empire," Neal said of UK prime minister Boris Johnson. "You'd be hard pressed to find anybody else who has been saying the things he has been saying as related to the backstop provision."
State under pressure on tax
For all the support the State has received from Europe during the Brexit talks, the picture could hardly be more different when it comes to our corporate tax arrangements.
The time for “aggressive tax behaviour has come to an end”, Pascal Saint-Amans, the tax director at the Organisation for Economic Co-operation and Development (OECD), said this week, arguing the State cannot continue to say “no, no, no” to change.
Saint-Amans acknowledged that the impact of changes any reforms might have on Ireland’s foreign direct investment would be “key”.
One of the proposals from the OECD is the imposition of a minimum tax on the profits of major multinationals. This was highlighted by Irish tax experts this week as the biggest threat to Ireland from the tax reform process.
Asked what rate he felt might emerge as a minimum corporate rate if agreement was reached, Saint-Amans said this was not clear, but that he “wouldn’t be surprised” if something close to the State’s 12.5 per cent rate emerged as a benchmark.
Separately, the European Commission served formal notice on the Republic, calling on it to implement key anti-tax-avoidance rules in relation to how companies use interest payments to cut their tax bills. We previously deferred the changes until 2024.
The threat of all this to the economy was touched upon by Ashoka Mody, the former head of the IMF mission in Ireland, in an interview with The Irish Times. Mody said we rebounded so robustly from the financial crisis largely due to our corporate tax regime.
That means international tax reform now threatens a “big setback” for the economy. “Complacent Irish authorities have taken the easy approach,” he said. “They have not invested in a growth model that creates long-term domestic capabilities.”
Elsewhere, a Central Bank study suggested that net inward migration will be the most important source of new employees if the economy continues to grow at the rates seen over the past number of years.
Week to forget for Ryanair and O’Leary
Budget airline Ryanair and its chief executive Michael O’Leary endured a torrid week with pay cuts, job losses, and a multimillion euro bill for illegal state aid it is alleged to have received from France.
The week started as it would continue, as the airline posted results which showed that profit fell 21 per cent to €243 million in the three months to June 30th compared with the same period the year before.
Then came the bombshell news that the airline is preparing to cut up to 500 pilots and 400 cabin crew in the coming months. O’Leary blamed falling air fares, rising staff and fuel costs, Brexit and stalled aircraft deliveries for the move.
O’Leary himself has suffered a 50 per cent cut in pay after signing a new contract in April. But, before you start feeling too sorry for him, he will still be paid €500,000 in addition to a potential bonus to a maximum of the same amount.
Then, on Friday, EU competition regulators ordered France to recover €8.5 million in illegal aid granted to Ryanair at Montpellier airport because it gave the Irish low-cost carrier an unfair advantage.
On a separate note, Ryanair – as well as Aer Lingus – has backed proposals to cut passenger charges at Dublin Airport in spite of warnings from Dublin Airport Authority that this would hit badly needed development at the State's largest airport.
