The Irish once flocked across the Atlantic in search of the American Dream. Now it has come to them. Thanks to tax revenues from US multinationals, the Irish government is awash with cash – and it’s struggling to spend it fast enough.
It has poured billions into sovereign wealth funds, approved what may become the world’s most expensive hospital, spent millions trying to wean school children off smartphones and blown £300,000 on a bike shed.
The post-financial-crash doldrums are long gone, and few have gained more from Uncle Sam’s patronage. One in eight euros of Irish tax revenue now comes from US companies, a 500 per cent increase since 2010, driven by Ireland’s competitive tax regime.
While the eurozone has limped along at below 2 per cent annual GDP growth, Ireland’s economy has soared. Its 34 per cent leap in 2015 – largely from multinationals shifting intellectual property to Ireland – was so eye-popping that economists coined a new term: “leprechaun economics”.
But now, at the other end of the rainbow, Donald Trump awaits. For him, American firms lining Dublin’s coffers – while Ireland enjoys a trade surplus – looks like a bum deal. “Why is Ireland announcing a surplus?” grumbled Howard Lutnick, Trump’s commerce secretary, last year. “Give me a break. It’s all our business. Have them pay their taxes in America.”
With Trump threatening Europe with tariffs and moving to slash the US corporate tax rate, Ireland’s economic golden age could soon unravel.
How have its leaders responded?
First, by eating their words. Simon Harris, Ireland’s foreign minister, once dismissed Trump as “an awful gowl” (idiot). Now he insists it was “light-hearted” banter. His congratulatory letter after Trump’s inauguration even praised the Republican’s “magnificent golf links in Doonbeg” – just in case there were any hard feelings.
Irish politicians are prone to virtue-signalling first and considering the repercussions later – a strategy that has landed them in the bad graces of key US officials, whom they must now win over in an “all-out diplomatic and trade offensive”.
Harris insists the “chess pieces” for his charm offensive are well positioned. Ireland serves as a key gateway to Europe for US firms and ranks among America’s top 10 investors, with Irish companies employing 100,000 Americans. He hopes this will give diplomats some leverage in a Washington now ruled by quid pro quo.
However, Irish officials may find the new dispensation frostier than the last. Like Mr Harris – who flaunted a Kamala Harris hat during the US election – Ireland’s diplomats reportedly backed the wrong horse. “They shunned Trump people for four years,” says Sean Spicer, Trump’s former press secretary. “They made a big mistake betting the whole lot on the Biden administration.” Even Ireland’s ambassador nailed her family’s colours to the mast before assuming her post, gushing that her son, a campaigner for Ms Harris, was a “huge fan” of Joe Biden.
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