Financial services may be at risk after UK veto

INDUSTRY REACTION:BRITAIN'S DECISION to opt out of the new fiscal rules signed last week by most members of the European Union, may damage Ireland's financial services sector, industry representatives have claimed.

Brendan Bruen, director of Financial Services Ireland, a division of employers’ body, Ibec, said a proposed tax would have “a significant impact” on Ireland, as well as Europe as a whole.

“It’s not just an Irish problem. It doesn’t make sense for the union. Business that would have been done in the EU will now not be done.”

British prime minister David Cameron last week chose to opt out of the EU fiscal integration deal which is proposing the introduction of a new tax on financial transactions.

The IDA, which is responsible for attracting financial services and other companies to Ireland, has also expressed “huge concern” at the proposed tax.

A spokeswoman for the Irish Funds Industry Association, the representative body for Ireland’s international funds industry, said the association was “awaiting detail” of the proposal.

Fianna Fáil’s finance spokesman Michael McGrath said thousands of jobs were potentially at risk if London becomes a more attractive base than Ireland.

“We could soon have a situation where the financial services industry in Ireland will be subject to a new transactions tax, but the city of London will be exempt,” he said.

“Such a scenario could have serious ramifications for what is a critically important industry in Ireland.”

Some 33,000 jobs were at risk, he said. “Taoiseach Enda Kenny needs to urgently clarify if Ireland has committed to a new financial transactions tax and to state clearly what the implications of such a tax would be for Ireland given that the UK will be exempt.”

However, other industry sources questioned whether a financial transactions tax would have a significant impact on Ireland’s financial services industry.

While about 75 per cent of the world’s financial transactions take place in London, the Irish financial services industry is not transaction-focused, but instead provides support and structures for transactions.

The Irish funds industry, which is centred mainly in the IFSC area, services assets worth more than €1.8 trillion held in over 11,000 different funds. It employs more than 30,000 people.