Belfast Telegraph

Thursday 24 July 2014

Ulster business chiefs giving their tuppence worth on spending cuts

Business organisations from accountants to chambers of commerce are rushing to get their tuppence worth in ahead of the comprehensive spending review of next week.

BDO, the CBI, the Northern Ireland Chamber of Commerce and today's darlings, PricewaterhouseCoopers, have all sent out their press releases and reports about how we can reshape our flabby-yet-frail, overly public-sector reliant economy and toughen it up for the hard times ahead.

Fine words have flowed from all corners and almost all offices in Belfast, with the CBI probably earning the most media coverage as they were first out of the traps.

PwC are not shying away from the issues either, by pointing out the frightening statistic that 943,000 jobs could be lost across the UK by 2015, such will be the domino effect on the private sector of the public sector cuts.

But, sadly, we are pretty powerless to fight whatever curious George has up his sleeve for us next Wednesday.

No-one can confidently feel that Northern Ireland will receive special treatment on account of its frailties, both historic and continuing, political and economic - the cuts to child benefit alone make it hard to avoid the conclusion that the axe will be yielded with pragmatism and an absence of sentimentality.

There are few business bodies out there that haven't at some stage nursed a sneaking regard for the 'cut corporation tax' argument. In an audacious report today, the TUC and Northern Ireland committee of the Irish Congress of Trade Unions take an uncompromising look at the arguments for corporation tax cuts, and give their reasons why it's not the right answer for our economic woes.

They say the cut could encourage 'brass plate' corporate behaviour, with companies setting up in the province for its benevolent tax regime, without actually bringing any staff. The unions also dismiss the contention that it would be a shot in the arm for us in the same way as cutting corporation tax supposedly helped create the Republic's late, lamented tiger economy. "Ireland has enjoyed low tax rates since 1957, yet its GDP did not grow sharply until the mid-1990s. Irish membership of the euro in 1992 has played a far greater role in its recent growth," the TUC argues.

The corporation tax debate is a familiar one here. Now that the unions have stepped in, let the great debate begin (again).

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