Business

Lack of governance 'problematic and could make US firms walk away' warns chancellor

Chancellor of the Exchequer Phillip Hammond (right) with Jonathan Connell, vice president of operations, during his visit to the Bombardier factory in Belfast
Chancellor of the Exchequer Phillip Hammond (right) with Jonathan Connell, vice president of operations, during his visit to the Bombardier factory in Belfast Chancellor of the Exchequer Phillip Hammond (right) with Jonathan Connell, vice president of operations, during his visit to the Bombardier factory in Belfast

BRITISH chancellor Philip Hammond fears big American investors could decamp from Northern Ireland because the non-functioning Stormont Executive is making things "hugely problematic" for business.

And amid fears of a possible upsurge in smuggling if the Irish government was to impose tariffs on trade with the UK after Brexit, the chancellor insisted there is already an effective method of managing cross-border excise issues based on intelligence-led collaboration between the PSNI and the Gardai.

He was in Belfast for a series of engagements, principally to announce that plane manufacturer Bombardier will receive £12 million of government funding to help develop the new thrust reverser which will help secure local jobs and cement the UK’s role as a leading manufacturer of high tech aircraft components.

During a tour of Bombardier's production line he welcomed the new orders of 60 A220s (formerly the CSeries and the wings of which are made in Belfast) announced last week at the Farnborough Air Show.

The chancellor also met key financial services firms at Allstate, where he stresses that Northern Ireland, with 33,000 people working in the sector, is a vital part of the overall UK finance sector.

"It's all too often forgotten that financial services employment is spread across the whole of the UK. 'The City' is not just based in London, so it was important to get together with that sector in Belfast and talk to them about the UK-wide issues and some of the specific Northern Ireland issues," he said.

Mr Hammond also addressed a business round table in Limavady attended by eight of the north’s top firms and visited Ulster University in Derry where he invited local partners to submit a bid to government for a City Deal in order to drive growth and boost productivity.

Speaking to the Irish News Mr Hammond said he was delighted at the outcome of a trade dispute between the Canadian-owned firm and rival Boeing earlier this year in which the International Trade Commission overturned a recommendation by the US Department of Commerce to impose a 300 per cent punitive duty on sales of the jets for five years, putting 1,000 jobs in Belfast at risk.

"The government was heavily involved in lobbying for Bombardier as the dispute with Boeing unfolded. It was a good outcome for this plant and secures its future, as does the announcement that we are backing Belfast with £12 million of new money, which underscores the strong future for this plant and the expectation of a big increase in output volume over the next few years and Belfast becoming an embedded part of the Airbus supply chain."

When quizzed on the anger felt by businesses in the north at the lack of direction on Brexit particularly and the rudderless Stormont administration, he said he was concerned investors could walk away.

"Anger is too strong a word, but I sense frustration and concern that if the situation goes on, it will exact a toll on inward investment and confidence by foreign firms who are already invested here.

"I talked this morning to the local CEOs of American-owned businesses who told me it is very difficult to explain to their corporate leaders in the US what it means, and how it works to be in a place that has no political governance.

"Obviously it can be managed for a while. But as we head towards the two-year mark without a government here, it becomes hugely problematic for businesses.

"What we must avoid is a situation where Northern Ireland becomes relatively unattractive as a destination because of problems around governance.

"Therefore I urge the parties to make progress towards resuming the power-sharing Executive, which is absolutely vital to the future of Northern Ireland and has been the basis on which the sustained progress of the last 20 years has been made."

He added: "I don't come to Northern Ireland that often now, but I used to work here in the late 1970s in a medical electronics business, and this city looks nothing or feels nothing like it did back then.

"The sense of prosperity and prospects for the future is simply transformative, and the idea that people would even think about allowing it to slide backwards is intolerable. We must go forward and have to get back to the power-sharing arrangements that have delivered such progress."

On Lord Trimble's comments on a possible upsurge in smuggling and potential losses to the Treasury, Mr Hammond said: "It would be naive and disingenuous of me to suggest no smuggling takes place. But we have an effective method of managing cross-border excise issues based on collaboration between the PSNI and the Gardai and using an intelligence-led rather than a crude physical approach. That works well for excise protection.

"But in any duty-based regime there will always be some avoidance, just as there is, for example, at Dover-Calais. But we protect our revenues adequately under the current arrangements and I expect to see similar levels of cooperation continuing in the future."