Real pressure points are forming in the economy. The favourable winds that helped bring our unemployment rate down from 15pc in 2011 to below 7pc now are shifting.
One of the problems for Ireland is remaining attractive as a place to live and work. Sometimes that is about more than just wage rates or taxation. It is also about housing, quality of life, transport and what plans we have for the development of our cities.
Some warning clouds are already appearing. We have had genuine investment gains in relation to attracting financial services companies to Dublin in the wake of the Britain’s Brexit vote but we have also lost out on several other big wins we were competing for, such as insurers AIG, Lloyds and Standard Chartered.
Our reputation is suffering as a result of Apple tax rulings and comments from Brussels to Washington DC about our corporate tax practices. Chief executives might actually love it, but it doesn’t mean it helps with attracting skilled workers.
On a different note, a survey of staff at the European Medicines Agency (EMA) in London, found that 45pc of them said they would be unlikely to want to relocate to Ireland. The EMA is expected to move out of London after Brexit to a new EU location and Ireland would see itself as in the running to win this major prize.
Unfortunately, Dublin was not among the top five locations favoured by EMA staff. We came in seventh – behind Amsterdam, Barcelona, Vienna, Milan, Copenhagen and Brussels.
Staff preferences may not be the deciding factor on where the agency goes, but it will count for something. More importantly, we should ask why not Dublin, compared to those other cities. Bear in mind, the EMA is likely to have a multicultural workforce that currently lives in an English-speaking city. Yet, more of them would rather go to Austria or Denmark.
This doesn’t say much for the clap on the back we constantly give ourselves about the success of ‘Brand Ireland’ and our reputation abroad.
It gets a lot more serious when the head of international financial services at IDA Ireland, Kevin Donoghue, is telling a Brexit conference that companies want to know about our future plans for our cities, how they will develop and issues like housing and infrastructure.
Ireland’s tourism industry is riding high with record levels of international visitors. But wanting to come here for a holiday is different to wanting to live here. They are connected in so far as they both rely on a positive international reputation or brand, but it wouldn’t take somebody very long to Google the price of a three-bed semi D in Dublin or a one-bed apartment to rent.
The results might be shocking. I am sure the average employee in the EMA in London is paying a right whack in mortgage or rent but they have a transport network to match.
Issues around quality of life, the social and physical environment, public amenities, infrastructure, healthcare, culture, as well as personal taxation, are becoming ever more important in the battle to attract investment.
Fixing the housing crisis isn’t just a social imperative. It is also an economic one. Future investment decisions are taking account of new factors like having a plan for tackling the social challenges of a rising population with a greater concentration on the east coast.
Dublin is a great place to live if you can get an affordable roof over your head. Galway is a wonderful city if you can get through the traffic.
Unfortunately, it is a bit annoying to think the Government might really start to work on fixing these things when we think it is affecting our international image and reputation. Of course we should seek to fix these issues for the people who already live in Ireland and not just those who might come.
Equally, there is an imperative to safeguard future jobs so we can retain the workforce and money required to fix these problems in the first place.
But there have always been contradictions around Ireland’s international image. Back in the 1980s we had postcards for tourists with donkeys, and blokes with enormous beards. There was even the famous one of the woman with a seagull on her head.
At the same time IDA promotional literature was seeking to present us as the “young Europeans” full of education, ambition and progressive modern thinking.
Ironically, we have got so much right for both the tourist market and the foreign direct investment sector. In a way, both have worked. But we may be running out of steam if we cannot back up the investment promises we make to multinationals or provide a better quality of life for our citizens.
Many chief executives making investment decisions will look at the corporate tax rate, the business and regulatory environment, the educated workforce and the cost of doing business.
But increasingly they have to examine the cost of living for potential employees, the cost of housing, health services and schools.
Ireland has traditionally performed reasonably well in global reputational and brand surveys. But we have to be careful about reading too much into surveys. Like any brand in any business, perception is valuable but it has to be matched by the reality behind it, or you will eventually get caught out.
We featured as No 1 in the world Good Country Index 2014, which was supposed to reflect perceptions about contributions to humanity, equality and all of that good stuff.
But the following year we had fallen back to 11th. It turns out the 2014 result was based on data from 2010 and the 2015 was based on data from 2011 – the year the troika set up shop.
Such swings might not say much for the usefulness of some surveys but perceptions really do count.
We have consistently scored well in surveys like the Anholt Gfk Roper Nation Brand Index, which gathers the views of 20,000 people around the world. Perceptions are polled on exports, governance, culture, people, tourism and immigration/investment.
Ireland typically comes in around 18th or 19th. It isn’t bad for a country of our size but it has to be borne in mind that we are usually behind Denmark, Finland, New Zealand, Austria and Scotland. The top five don’t change that much and include the US, Germany, UK, Canada and France.
International surveys about doing business, are a dime a dozen but we usually score fairly well. Best Countries for Business had us in fourth last year.
However, that isn’t going to cut it for much longer. In the competition to win inward investment lots of other countries are catching up. Our business environment might appear very positive on one level. But having access to world class accountancy firms doesn’t count for much if all your staff can afford to rent is a bunk bed in Dorset Street.
The enhancement to our international reputation of paying up on our banking debts may well evaporate in time from the €200bn of national debt we clicked up in standing over those bond repayments.
Back in 2012 the founder of the Gfk Roper Nation Brand Index, Simon Anholt, suggested that Ireland could “position” itself differently in the future after the financial crash.
He suggested we could brand ourselves as “the first country to pilot and prove a new form of capitalism – more moral, more fair, more balanced, more human”. Five years later we can already see that we have missed the boat on that one.
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