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Brexit a ‘defining moment’ for Ireland, says minister

The Minister for Financial Services and Insurance Michael D’Arcy says that “Brexit is the overarching challenge for Ireland right now.

“Britain’s exit from the EU will be the defining moment in our relationship both with the UK and with the rest of Europe and, while it is regrettable, the people of the UK made their decision,” he said.

The minister was speaking at the #Agenda Seminar on 24 January, organised by the British Irish Chamber of Commerce, which discussed the challenges and opportunities that Brexit would create for the sector in Ireland, Britain and across Europe.

Committed

Minister D’Arcy commented that Ireland needed the closest possible trading relationship with Britain. The Government was committed to growing the financial services sector, he added.

While Ireland regretted Britain’s decision to leave the European Union, the Government would work to maximise any opportunities that arose, he said. It would also help to provide Brexit solutions for firms in difficulty as a result of Brexit.

The minister said he believed that Britain would emerge from its current “chaotic” phase, and that decisions on a new trading structure would emerge – but that Ireland had to remain agile and flexible in response.

“Ireland is the third-largest funds jurisdiction in the world, and the second largest in Europe,” he said. In total, just under 7,200 funds were managing €2.48 trillion in assets domiciled here, which were supporting 16,000 jobs.

He concluded, saying that investment limited partnership legislation would be updated to make it more relevant in the current climate.

Functions shift

Brexit could see a shift from back-office to front-office functions in financial services and asset management in Dublin, the seminar heard. In the original IFSC plan, front-office operations had been envisaged.

Discussing the implications of a ‘no-deal’ Brexit, attendees heard Ulster Bank chief executive Jane Howard describe Irish businesses as facing a period of “unprecedented uncertainty”.

Uncertainty

However, most speakers were optimistic that Britain could emerge from its current period of uncertainty as sterling stabilised.

John Cronin (McCann FitzGerald partner, and chair of the British Irish Chamber of Commerce) told the Gazette that leading legal firms were seeing a small increase in overseas clients coming to them for assistance in finding Brexit solutions.

The Central Bank recognised some time ago that Ireland was likely to become host to new types of financial services products as a result of Brexit, and had indicated a readiness to expand its range of supervisory activities.

“The range and nature of products in Dublin is increasing and, consequently, the nature of the advices and work being carried out is also expanding,” he said.

But he pointed out that President Macron was the first French leader who really understood international financial services, and would bring that knowledge to bear in trying to build up Paris as a centre for such work.

Inflection point

Ulster Bank economist Simon Barry pointed out that global economic growth had passed an inflection point and was now on a “path of moderation”.

It was better that the Irish economy be hit by a negative shock such as Brexit when it was doing well, he said, and that our macro-financial vulnerability was not as high as during the financial crisis.