The UK government is actively exploring ways to aid the Dublin stock exchange recovering from a number of significant departures and a scarcity of fresh listings in recent years. One such measure under consideration, as stated by Neale Richmond, the Minister of State with responsibility for financial services, could be the introduction of tax incentives to stimulate activity.
The government has confirmed ongoing discussions with Euronext Dublin regarding proposals for tax-efficient savings products. The aim is to motivate retail investors to channel investments into Irish stocks. All potential encouraging approaches are being considered, however, the relevance to the budgetary constraints is the understood caveat.
Two major firms from Dublin’s bourse, Flutter Entertainment and building materials entity CRH, have recently withdrawn. Another industry leader, packaging firm Smurfit Kappa is preparing to leave. In the past half-decade, the exchange has seen a meagre three new listings. Furthermore, the number of firms on the bourse has dwindled by half over the past seventeen years.
Richmond elucidates that these challenges are not exclusive to the Republic; other minor European exchanges are also affected. Yet the government is committed to continuing discussions with the industry to identify potential ways to provide support. That said, attempts by the government to implement new tax laws to bolster the Irish sector could potentially be constrained due to European state aid rules.
Richmond, who accepted responsibility for financial services eleven weeks back following consideration for a full cabinet position by the newly appointed Taoiseach, Simon Harris, visited London to speak at an Enterprise Ireland-hosted dinner at the Irish embassy in Belgravia. The gathering concentrated on the financial technology sector and attendees included representatives from the Irish diaspora employed in the industry in Britain, as well as multinational corporations investing in the sector at an international level who are clients of IDA Ireland.
Richmond says future growth across the industry will be targeted by the government.
Taking on the financial sector-related statement made by Rachel Reeves, the likely candidate to be the first female chancellor of the exchequer if Labour emerges victorious in the UK’s July 4th elections as reported by The Irish Times, the Minister offered some responses. If Labour were to assume administrative power, it has pledged to negotiate a superior post-Brexit agreement with the European Union benefitting financial employees in the City of London. The deal would also focus on recognition of qualifications. Reeves conceded that new negotiations following Brexit would require a compromise from both parties, though she refrained from outlining what concessions Labour would potentially make to Europe.
Mr Richmond opined that while the Government is inclined towards a strengthened relationship between the UK and the EU, it must not presume an unrestricted access to all its desires. The EU has persistently cautioned the UK against selectively choosing terms of EU membership. Furthermore, Mr. Richmond stated that Ireland at the EU level will always endorse continuous discussions. Ireland has always aimed to uphold a strong relationship with the UK within the EU, and not just in financial services, but in broader aspects as well.
The Irish financial sector, employing 57,000 individuals, is closely aligned with its counterpart in the City of London. This mainly due to several large UK banks and insurance companies maintaining their back-office operations in Dublin.