Our Foreign Direct Investment people can afford to smile after big swing to Ukip

Despite the parliamentary posturing over the Irish taxation system in Britain over the past year, Britain has recognised that it can compete better against Ireland’s attractiveness to multinationals by improving its own taxation offering.

Hence, rather quietly, it dropped its corporate tax rate to 20 per cent, highlighted by my colleague Mark Paul in a recent article in this paper. He noted that David Gauke, the exchequer secretary to the UK treasury department, came out with a claim this month that the UK was now "top of the list" for consideration for foreign direct investment (FDI).

"A few years ago [Britain] wasn't even making the shortlist. There is increasingly the sense that the UK is as competitive and attractive as other jurisdictions, whereas previously multinationals might have looked at Ireland, " Gauke said.

Over here the Government and agencies like the IDA know that Britain has seriously upped its game in this area, not just with taxation adjustments but broader packages of measures that are used to appeal to multinationals.

As Ireland has long known, taxation alone is not the bottom line for FDI because there are lower tax jurisdictions than Ireland (Singapore, for one).

Gauke overstates his case for exactly this reason. Despite the implication of his comments, of course multinationals are still looking at Ireland. And after last week’s elections they’re likely to find Ireland increasingly more attractive in a key area: access to the European market.

British voters won't have helped the FDI cause by giving the Eurosceptic UK Independence Party (Ukip), which wants Britain out of the EU, a big win in the elections. Yes, there has been a general Eurosceptic revolt all across the EU in the elections. It isn't just Britain. But the difference is that the Euroscepticism of Britain, including amongst many mainstream Conservative MPs, is dominated by the rhetoric of actually leaving the EU. Elsewhere it tends to be more about reform.

Britons were promised an eventual vote on whether they want to remain in the EU by British prime minister David Cameron.

By contrast, there’s never been anything more than minor squeaks in Ireland from peripheral political groups and from Independents on seriously considering having Ireland leave the EU.

Heebie-jeebies

Now, if you are a big tech multinational considering a European base, for the very reason of targeting the massive EU market, then the political situation in the UK might increasingly give you the heebie-jeebies.

What you're looking for, if you are, say, a Silicon Valley or Seattle or Boston or New York start-up or tech giant, is a location that is English-speaking, has access to a good workforce, is attractive for tax and other operational reasons, and can open doors into the EU. Bonus points if you don't have to go through a third currency.

If you think this doesn’t really matter all that much then consider Cameron’s quick and alarmed back-paddling on the EU membership referendum he proposed and promised by 2017.

In the immediate wake of the UK elections, and calls by some in his own party to bring forward the referendum to 2016, he stated this week that he wanted to work to renegotiate Britain’s relationship with the EU and strive for reform, leaving the referendum to happen after (he hopes) significant changes.

That will all have brought quiet satisfaction to the people over here working in the FDI bailiwick. It won’t be focused on publicly, but have absolutely no doubt that Irish discussions with FDI prospects will bring up the UK’s uncertainty over its own membership in the EU.

And while we’re considering the whole package on offer, that little problem with large-scale surveillance and interception of data traffic from US tech companies by UK spy agency GCHQ is also no doubt being mentioned in FDI discussions.

Yahoo recently acknowledged it just left the UK for Ireland in part for this reason after it was revealed that GCHQ had intercepted and stored millions of still images taken from private Yahoo video streams. Yahoo said this constituted a “whole new level of violation of our users’ privacy that is completely unacceptable”.

If the UK is looking for reform it needs to add GCHQ to the list alongside the EU.

Meanwhile expect these two areas to be British FDI own-goals that will be exploited by Ireland and other countries.