Looking beyond the pandemic . . . the time is now
BEYOND the pandemic, in a world where global tax reform, climate change and digitalisation will dominate political agendas, there is great opportunity for Northern Ireland.
As a small, open economy, focussing internationally will be critical to boost growth in the region and with appropriate policy tools, FDI could be the key driver of Northern Ireland's quest for economic prosperity.
The region is already home to more than 1,100 international companies and has established itself in some of the world's fastest growing and innovative industries including data analytics, cyber security and life and health sciences.
Attracting further FDI will increase the ability of the region to compete globally which will help to retain the workforce and attract newcomers and inward investment as well as helping to promote Northern Ireland as a place to live, work and visit.
But there are certain things that need to change to make this a reality.
The Stormont Assembly must take on the responsibility of enhancing the region as a suitable business environment. Investment must be made in lifelong learning and research capabilities to allow people across society to benefit from better jobs with better wages and an improved quality of life.
At the moment, Northern Ireland has the lowest levels of income compared to England, Scotland and Wales and its fiscal deficit per person is higher than the rest of the UK. Increased FDI has the potential to change all of that.
There are plenty of examples across the world about how tax policy, combined with inward investment, a skilled workforce and good infrastructure, contribute to extraordinary economic success. Such countries have been able to attract large investors and secure repeated investments from international companies.
One way to provide a conducive business environment for FDI is for Northern Ireland to take control over the setting of its own corporation tax rates - something the Fiscal Commission is examining as part of its ongoing review of the case for increasing fiscal powers to the Assembly.
The UK government has announced its intention to increase the main rate of corporation tax to 25 per cent from April 2023 for companies with profits of just £250,000 or more.
The activation of corporation tax rate setting powers would allow the local Assembly to set a lower corporation tax rate for the region to attract FDI, drive investment and expansion by local companies and allow Northern Ireland to take advantage of its position under the Protocol with free access to both EU and UK markets.
Currently there are 6,000 more companies registered in Northern Ireland today, than in 2016 and strikingly 70 per cent of new investors choose to subsequently reinvest in the region, resulting in successive waves of investment – a measure of FDI success.
New findings published by FinTechNI show that Northern Ireland could benefit from over £25 million in new FDI, the set-up of over 20 new companies and the creation of thousands of jobs in just three years. The fintech cluster is currently estimated to be worth almost £400 million per year to the local economy.
We need to continue to build on our education system and fund it to a level that makes Northern Ireland competitive. We need to encourage our graduates to come back to the region to work and live.
With the right investment in lifelong learning and research capabilities combined with further FDI, this momentum can spread to all parts of our economy and create opportunities for people and allow them to prosper.
The potential should not be underestimated and the opportunity to act now should not be overlooked.
:: Maeve Hunt is chair of Chartered Accountants Ulster Society, which is hosting a half-day ‘Countdown to Growth' conference on November 18 at ICC Belfast and online. Visit www.charteredaccountants.ie/ulster/events for more information