Ireland needs a new, transformative economic plan, along the lines of the one drawn up by former taoiseach Sean Lemass and civil servant TK Whitaker in the late 1950s, to cope with the fallout from Brexit and other economic challenges, Fianna Fáil's Stephen Donnelly has said.
Addressing the 40th annual Dublin Economics Workshop conference in Wexford on Friday, Mr Donnelly said the State was facing a "juggernaut of economic problems" in form of Brexit, a more isolationist US and a renewed European assault on Ireland's corporate tax code.
However, the challenges, formidable as they were, also provided an gilt-edged opportunity to dump the short-termism of previous administrations and push through a new economic and industrial strategy for the country, analogous to the Whitaker plan, he said.
The plan has long been credited with transforming Ireland from an inward-looking, protectionist economy and society into a vibrant, open, outward looking one.
"While it has served us well since its implementation in the 1960s, it more or less stopped at the Anglo Saxon world," Mr Donnelly said, noting that very few indigenous firms here traded with mainland Europe because of the special relationships enjoyed with the UK and the US.
Trade figures suggest Ireland has been diversifying into the EU since the early 1990s, but the pick-up has largely been down to big multinationals, he said.
“While we have some phenomenal successes in Ireland, the institutional capacity of our SMEs to innovate and replicate what the multinationals are doing is much lower than the European average,”he said.
Brexit was a threat from the east, but Mr Donnelly said Ireland was also facing a considerable economic challenge from the west in the form of a more protectionist US under Donald Trump.
“The US president is now openly talking about multinationals repatriating jobs from Ireland,” he said, referring to Mr Trump’s tax reform plan, which aims to onshore multinational profits.
"And from the south, our good friends in the European Commission have relaunched the CCCTB [the EU's plan for harmonising corporate taxation across the bloc], which would wipe billions off Ireland's tax base and make us much less competitive for foreign direct investment," he said, noting the renewed plan was relaunched the day after the UK's Brexit vote.
Mr Donnelly, who is Fianna Fáil’s spokesman on Brexit, said the State needed to recognise it is facing “material threats”.
The best way it can respond is to develop a national programme of supports for the SME sector to help it diversify into mainland Europe. "India and China are a bit of a distraction: the EU market is largely untapped for us. Our product and service offering is much more amenable to those markets."
He said such a plan would take three to five years to implement and would require the relaxation of EU state aid rules , greater access to low cost funding and major investment in product development and marketing.
More than 150 economists, policymakers and academics are attending the conference at Whyte’s Hotel, Wexford, which is sponsored by Dublin Chamber.
