Business tax cut could create 2,800 foreign investment jobs

A reduction in the rate of corporation tax in Northern Ireland could create an extra 2,800 foreign direct investment jobs annually – a doubling of the current forecast – according to a new report.

Experts at the Financial Times said that reducing the rate from the UK benchmark to 12.5%, the same as that in the Republic of Ireland, would have a strong impact on business, professional and financial services and on manufacturing.

FDI Intelligence, a research firm run by the FT, was commissioned by the Department of Enterprise, Trade and Investment to assess the quality of foreign direct investment into Northern Ireland and to help inform future FDI policy.

The report said that FDI strategy should continue to focus strongly on US software and IT in existing software.

In the rapidly expanding renewables sector, the authors of the document said that new opportunities exist from India, Germany, China, Australia and Sweden, forecasted to be the fastest-growing sources of investment.

The report said that Northern Ireland should be able to compete effectively for research and development investments in renewable energy as it has specialist research institutes which could help attract a share of the foreign direct investment projects investing in the UK.

Targeting higher value sub-sectors in the business and professional services and financial services sectors, continued focus on the booming aerospace sector and a new focus on biotechnology have all been identified as key to success.

The lowering of corporation tax was cited as the main policy option in the report, which said: “Reducing corporation tax is the most direct, highest-impact policy tool available to achieve a major increase of FDI in Northern Ireland.”

In terms of software investment, Northern Ireland was compared to London, Manchester, Dublin, Paris, Bangalore and Warsaw.

From 2003 to 2010, the survey recorded over 50 software and IT FDI projects investing in Belfast, over double the number of Manchester and more than Warsaw.

Relative to population, Belfast was the best performing city, attracting nearly triple the number of projects as London, nearly double the number as Dublin and four times the number of Bangalore.