...Although any further bailouts remain highly unlikely in our view, a sharp deterioration in Ireland s credit risk profile could endanger the country s economic recovery, as higher borrowing costs puts pressure on the country s already shaky fiscal dynamics. -: improving relations With northern ireland Although political stability has been much improved since the development of power-sharing government in Northern Ireland, which appears to be making steady progress in trying to end over -- years of secessionist violence and unrest, there remains a risk that relations between the two sides could dete- riorate. Any significant rise in nationalist and unionist sentiment will continue having the ability to dominate Ireland s foreign policy agenda, as well as instigating unrest on both sides of the border. In our view, a notable deterioration in relations would have negative implications for long-term political stability in Ireland, as well as weighing on the country s attractiveness as a business proposition. -- Business Monitor International Ltd www political outlook one of the Worst Hit
...Ireland s favourable corporate tax regime is likely to come under in- creasing international pressure in ----, damaging the country s repu- tation within the EU and placing government under more scrutiny. The recovery of the housing sector is also likely to play a prominent role in Irish politics over the coming quarters, although we believe risks stem- ming from the sector will remain contained for the time being. ...This could have negative implications for government revenue collection in Ireland, if implemented effectively. While we do not see any immediate risk that multinationals will begin scaling back activity in Ireland, the uncertainty created by the threat of changes to the country s tax regime is likely to weigh on investor perceptions of the country s business environment. Ireland s score of --.- (out of ---) in our business environment ratings currently reflects the country s position as an attractive investment destination. ...The threat is particularly salient given Ireland s ability to attract international investment has allowed it to punch well above its weight in the technologi- cal sector, led by investment from Apple and Google. Despite having a population of just -mn, Ireland s IT export industry is the second-largest in the world by market share, only narrowly - Business Monitor International Ltd www ireland Q- ----
...Irish Prime Minister Enda Kenny suggested in March ---- that the corporate tax rate is playing a central role in an economic recovery that is being largely driven by investment from mul- tinationals firms and exports . Although Kenny has reiterated that the tax rate will remain in place for some time to come, we believe the government is likely to find its stance coming under increased international pressure in ---- and beyond. ...
