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Speech by Minister Simon Coveney Financial Services Ireland/IBEC Annual Dinner

‘Ready for Brexit and Beyond’

Good evening, everyone. I am delighted to be with you this evening for the annual Financial Services Ireland/IBEC dinner.

Thank you to Joe Duffy (Chair) for the invitation to speak to you tonight. Many politicians get quite nervous when they hear Joe Duffy is looking for them! I was reassured it wasn’t your radio namesake on the hunt this time.

I’m grateful too for the discretion to choose my own topic. And I asked my team in the Department of Foreign Affairs and Trade to prepare 3,000 words on how Cork will shortly be the second biggest English-speaking city in the European Union. They suggested we branch it out a little, which I am happy to do.

So tonight, we’re talking about “Brexit and Beyond”, which has a certain Star Trek ring to it. It’s certainly uncharted territory. And it’s a journey we never wanted to be taking. I think it was Harold MacMillan, the former British Prime Minister – ironically enough – who said what he feared most were “events, dear boy, events”. Happily, I don’t have the time to sit around mulling what it would be like to be Minister for Foreign Affairs and Trade at a time when Brexit wasn’t happening – to be harnessing all the energies of our 1,000+ diplomats and staff towards more constructive and positive initiatives. But events happen, and needs must, and there’s only time to roll up the sleeves and get on with it.

And, in that, as Minister for Foreign and Trade, my responsibility is to help achieve the best possible outcome for Ireland, Irish people and Irish companies from the current EU-UK talks. And to ensure that all of us are ready to meet the challenges posed by a rapidly changing external trading environment and the radically reshaped landscape that will follow after our major trading partner leaves the EU.

The problem we face is that we know the landscape will be reshaped but there is great uncertainty about what that will actually look like.

It might be useful to start from where we are currently.

The sixth round of negotiations concluded last week. This is an important point in the negotiations, with a lot of work still to be done before the European Council meets again in December. The crucial decision facing EU leaders next month is on whether there has been ‘sufficient progress’ on all three exit issues – citizens’ rights, the financial settlement and the Irish specific issues. That is a decision the EU27 will take together. The support of our EU partners for the unique challenges facing the island of Ireland has been strong and consistent throughout this process – remarkably so, in my view. It is humbling to attend meetings of the EU’s Foreign Affairs Council or General Affairs Council and hear so many expressions of support, privately and publicly, for our vital interests on this island.
And that is why we go into these December talks with great confidence, inspired too by the leadership Michel Barnier and his Task Force have provided and their commitment to delivering the right outcomes for Ireland.

Our overall priorities on the phase one Irish issues are clear – to protect our peace process, to prevent the return of any hard border, to ensure the continued full implementation of the Good Friday Agreement and all associated EU and other rights, to protect and develop North/South cooperation and to maintain our Common Travel Area. We have achieved good progress in a number of these areas, but there is still considerable work to do. And that is particularly the case for the border.

I think we have heard the correct aspirations from the UK around the border – that it needs to remain invisible, or at least without any physical infrastructure. It is just difficult to see how they marry that aspiration with competing and – in my view – contradictory ambitions to also see all parts of the UK depart the Single Market and Customs Union.
And as the latest in a series of Governments which have invested sweat and tears in trying to bring peace to Northern Ireland for more than 30 years, maintaining the invisibility of our border is – at this stage – the most vital prize of all.

I will be honest that these aren’t the easiest times for Ireland-UK relations. Britain is our closest neighbour and friend and the UK decision to leave the EU was a crushing disappointment. I also firmly believe it was not a wise decision – there is every chance the economic effects, for one thing, will be profound and sustained. And yet, even at this late stage, and in the midst of significant political turmoil, there is an opportunity to mitigate those effects.

The best mitigation would be for the UK as a whole to remain within the Single Market and Customs Union, or something very similar. I remain convinced that this is overwhelmingly in the economic and other interests of people across our two islands and I will be reiterating that to Boris Johnson when I see him tomorrow morning.
Failing that, unique solutions will be needed for Northern Ireland which prevent any need for a new or more meaningful border. And anyone who has been paying attention to what the Irish Government or the EU Task Force have been saying in recent months can hardly be surprised that that remains our position today.

Once phase two of these talks commence – and we begin discussing transition arrangements and the future EU-UK relationship – the British Government will have no greater ally than here in Ireland. That is because we want essentially the same thing – as close as possible a trading relationship, which sustains, as far as feasible, the €65 billion in goods and services moving between these islands each year. We also need a transition or implementation period which is as long as necessary for these arrangements to be bedded in. In my view, this may mean we need closer to 4 or 5 years than 2 – the key point is that we get this right, and provide businesses with as much certainty and predictability as possible.

In the meantime, the negotiations continue. And while we hope for a soft Brexit and a benign outcome, we are preparing for every eventuality.

I have just come from hosting with the Tánaiste a reception for Team Ireland trade practitioners from Government Departments here in Ireland and from across our overseas network of Embassies, Consulates, and state agency offices. They have spent the day working on strengthening coherence and coordination within Team Ireland so that we can maximise the impact of our trade promotion and deliver on our goals.

In preparing for Brexit, we are fortunate to be approaching it from a position of strength. Our economic fundamentals are very different to what they were five years ago. This year GDP grew at an annual growth rate of 5.8% in the second quarter.
Growth is expected to continue – the latest forecasts are for 4.3 per cent growth this year and 3.5 per cent next year. Both domestic demand and net exports will be a major part of that.

One of the better indicators of how far our economy has come in recent years is the sustained growth in employment. From a low-point in 2012, there are now an additional 230,000 people in employment – an increase of 13 per cent. The latest data shows that employment increased by almost 2½ per cent on an annual basis in the second quarter of 2017. If the present trends continue, there will be more people working in Ireland than ever before by the end of this decade.

It was in this context that our Government laid out our Budget for 2018 last month. This Budget delivers on the Government’s long-standing target of balancing the books in structural terms next year and reducing our debt ratio. It helps build the resilience of both the economy and the public finances.

Brexit is also a critical factor in our longer-term economic strategy – a new 10-year Capital Plan is in preparation, we’re revising our Enterprise 2025 policy and we are in active discussions with the European Investment Bank around a number of new initiatives.

Investing for the future will see total capital expenditure more than double between 2015 and 2021 – from €3.7 billion to €7.8 billion. The new National Development Plan will set out how we will invest €100 billion over the next ten years.

This will make Ireland’s public investment levels among the highest in the EU and it will enable critical bottlenecks to be addressed.

We must also seek to defend a rules based global trading system that has served us well, while recognising that those rules need to be subject to scrutiny.

Recent coverage has once again highlighted the complexities of our global trading system when it comes to ensuring fair taxation. This has sharpened a debate already well underway about national taxation systems in a globalised economy.

Ireland is very much part of that debate and determined to be part of the solution. We participate actively in progressing international reforms in the area of Corporation Tax. We are committed to implementing all of the OECD measures necessary to ensure that Ireland’s tax code meets the highest international standards. Ensuring a fair taxation system can only be achieved through a global approach to tax, and we are happy to play our part.

My colleague, Paschal Donoghue, has spent the last four days in the US making this point. Ireland offers a stable and competitive Corporation Tax system, which is internationally recognised as one of the most transparent in the world. We are very clear that the 12.5% tax rate is, and will remain, a core part of our offering. That predictability is, we know, key for the companies you represent. In terms of taxation, our offering has remained clear and unambiguous.

Ireland is a trading nation. Much of our prosperity comes from our position as an open, globalised trading partner.
But we recognise too that Ireland and Irish companies will need new markets internationally if we are truly to become “an island at the centre of the world”.

That is why we announced last month the opening of new diplomatic missions in Chile, Colombia, Jordan, Vancouver, New Zealand and Mumbai. This means that along with a doubling of Brexit-related staff in our State Agencies, we will have 6 new locations to grow and strengthen bilateral and commercial ties between Ireland and our global partners.

At home the Government’s enterprise agencies continue to work with companies, making them more competitive, diversifying market exposure, and up-skilling teams.

And this work very much includes our offering and attractiveness in financial services.
At the core of our IFS sector are over 400 companies. Approximately half are indigenous Irish-owned companies, including many here this evening, with operations the length and breadth of the country.

And it is because of the strength of the financial services industry in Ireland that we have been able to put together a competitive bid to host the European Banking Authority.

I’ll be in Brussels on Monday for the vote on where the EBA will be hosted once the UK leaves the EU – I’m hoping we have better luck than with our Rugby World Cup bid. Securing this Agency would only further enhance our standing as a leading global financial centre and would help secure further business into Ireland. The very fact that Ireland is competitive in the final weeks of the campaign is testament to the importance of our financial services industry and the offering we have for activities locating in Ireland after Brexit. Driving continuous innovation and research in the international financial services industry remains a key priority for the Government.
Yours is now a truly national industry, with significant numbers employed in IFS companies operating not only in Dublin city and county, but also in numerous regional locations such as Cork, Galway, Limerick, Kerry, Waterford, Kilkenny, Louth and Donegal. Approximately 40% of jobs in Irish-owned IFS companies and 30% of jobs in foreign-owned IFS companies are located outside of the Dublin/ Mid-East region.

We want to ensure that growth in the sector continues to be broadly based. I am heartened that Financial Services Ireland shares that aim and I want to take this opportunity to congratulate you on your plans for a series of regional events in 2018 focussing on the offerings that locations outside Dublin have to make. I am particularly happy to note that the first of these will look at ‘Cork as a cluster for financial services employment’. Currently that cluster has 19 international and indigenous businesses – but there’s room, talent and welcome for many more of you, believe me!

Thank you again for having me here this evening. I’m looking forward to the panel discussion and to hearing other people getting interrogated by Seán O’Rourke for a change!