Even as the Celtic Tiger roared, Britain proved a magnet for Irish entrepreneurs. They left behind a low-tax environment to launch companies here. What is it about our business climate that's so attractive?
Ireland has a long history of emigration, and sharp rises in the numbers leaving the country, especially after World War II, have been attributed to its flagging economic fortunes. But as Martin Ruhs, senior labour market economist at the Centre on Migration, Policy and Society at Oxford University, wrote in 2004: "Ireland's economic boom [in the 1990s] brought unprecedented levels of prosperity and helped transform it into a country of immigration." This, plus a natural increase in population, helped to boost the labour supply to 2.1 million people in 2006, which in turn helped to sustain high levels of economic growth.
But the Celtic Tiger economy has run out of steam and recession is taking its toll. Enterprise Ireland, the government organisation that promotes indigenous industry, has its work cut out to help retain skilled workers—especially so-called "Celtic cubs" in the 26-30 age group—lure back ex-pats (many of whom are working in the UK and the US), and convince blue-chip companies not to abandon investments in Ireland.
With its favourable business environment, this should not prove insurmountable. As KPMG notes, the country's corporation tax rate on trading income, at 12.5 per cent, is one of the lowest in the EU and one of the lowest "onshore" rates in the world.
And, points out Enterprise Ireland, the country is one of the world's most pro-business economies—the World Bank ranks Ireland sixth globally as a place to start a business. And the 2006 Index of Economic Freedom, compiled by the Wall Street Journal and the Heritage Foundation, states that Ireland's policy framework promotes an open and competitive business environment.
As Stephen Hughes, director of northern Europe for Enterprise Ireland, says: "The Irish economy is probably one of the most attractive in the world from an entrepreneurial perspective. We have good support systems for existing businesses and start-up entrepreneurs, who thrive in an environment where they get return for their activity. The economy is business-orientated."
Nevertheless, recent research says 43,149 company directors have left Ireland for Britain, 2,500 of whom fall into the Celtic cub category. Which leaves Adrian Brady, Irish founder of UK-based PR firm Eulogy (which commissioned the research) wondering whether the number of young directors leaving to work in the UK or start up on their own will rise significantly. "With the great success that older age groups have had and with the current trends in the Irish economy, it will be interesting to monitor the growth in the lower age brackets," he says.
Of the Irish directors working in UK boardrooms, the most high profile include Willie Walsh, chief executive of British Airways, and Niall FitzGerald, deputy chairman of Thomson Reuters. But those are large corporate organisations. Why would Irish entrepreneurs set up their own small businesses here when taxes are lower in their home country?
According to UK Trade & Investment (UKTI), it's because the UK has a compelling mix of a good business environment, a strong focus on research and development and a flexible workforce. Its chief executive, Sir Andrew Cahn, says: "Ireland is one of the top investors in the UK, so a lot of Irish entrepreneurs have already made the decision to find out what the UK can offer. It's very easy doing business in the UK. We value innovation and enterprise. There's also the magnet effect of having so many top-ranked businesses in one place."
Irish directors Rachel Dowling (Ascent Recruitment) and Paul Byrne (On Line Computing) confirm that the UK's access to significant markets and its strong, diverse workforce were key factors in their decision to launch businesses here. As Dowling recalls, she moved to London from Dublin after graduating 15 years ago because she could see greater opportunity in her sector, PR. "The obvious move was to go to London. It's the media hub of the world [the UK has the largest creative industries sector in the EU]. In Ireland, we were a bit behind at the time. The PR market was much smaller. When I got to London it was exciting. You got to work on high-profile stuff that you wouldn't have got to do in Ireland. Everything was on a bigger scale—clients' budgets were a lot bigger."
She says that she briefly considered going back to Ireland during its Celtic Tiger boom, but the PR market in Dublin was saturated with niche operators by then. "A small group of consultants had the market covered," she says. "And we were so busy here."
Dowling also says she prefers the more formal business culture in the UK. "A lot of business is done over lunch in Ireland. Very often it's a case of who knows who, whereas in England it's on the merit of the job done. If you do a good job, clients come back and that's where the loyalty is. I think that's more so than in Ireland."
Byrne agrees. Although he now lives in Ireland to be close to his family, he wouldn't consider moving his business from its London base and travels to the UK twice a fortnight. Britain is home to Europe's largest information technology industry and Byrne has built a £2m turnover IT company on the back of that.
"I wasn't tempted to move back to Ireland for the tax incentives," he says. "There's always enough work to be had in London—the majority of our clients are based there and, to be honest, I find Irish businesses typically difficult to deal with."
But while Dowling and Byrne are satisfied that Britain is the best place to run their businesses, they'd both like more help from the government. UKTI's Sir Andrew says: "The government has shown its commitment to helping businesses, notably small businesses, through a series of measures that include stabilising the financial sector."
But Byrne says: "The main thing the government could do for SMEs is regenerate confidence in the banking sector by forcing it to release funds. It seems bizarre that it cannot force these banks to lend to genuine business needs." Although his own company doesn't have a problem with cashflow, he adds, access to finance is still a concern. "It's affecting our client base. Confidence is knocked and people are hanging on to their own cash, whatever they have."
Dowling's gripe will resonate with many small-business directors. With most companies taking a financial hit right now, the last thing she wants to do is waste time on red tape. "There's a ridiculous amount in this country," she says. "I don't get the feeling that entrepreneurship is encouraged. We're the ones creating employment and jobs, and for our troubles we get a huge amount of paperwork and tax."
Which is why Ireland's tax policies arouse so much interest. Enterprise Ireland will argue that there are other key factors, including a flexible, well educated, English-speaking workforce and an entrepreneurial spirit, that have driven Irish businesses forward.
Hughes describes his challenge: "We're looking for entrepreneurs who want to relocate to Ireland. Some are ex-pat, but not specifically. We spend quite a bit of time speaking to UK-based entrepreneurs in a start-up mode who are looking at a positive business environment in which to establish companies, and we've had quite a positive number of people who've located or relocated back."
St Patrick's Day might not be celebrated with quite as much vigour this year, but as Hughes concludes: "The research confirms the great business links that exist between Ireland and Britain and should give us all confidence that we can successfully trade though these challenging times."
Working in America: Brits over the pond
UKTI may pitch Britain as a great place to start a business, but a study by the Institute for Public Policy Research in 2006 showed that the UK had more people living abroad than almost any other country. And after Australia and Spain, the US is the most popular destination for working British ex-pats.
Amanda Gillespie is a visa consultant who organises the necessary working visas and green cards that British citizens need to operate businesses in America. She says her UK clients head there for the same reason: having succeeded in Britain, they also feel that they've reached a creative or professional limit and are hungry for their next challenge.
Starting up a business in the US is, she says, much less onerous than it is in Europe. "There are fewer burdens in terms of costs up front and for maintenance. The biggest challenge is the sheer amount of creative competition. But I find that many of my clients who decide to come here already have the tools to succeed—tremendous will, belief in their skills, and talent and an ability to present themselves."
Gillespie helped twin brothers Adam and Nick Hayes, owners of graphic design agency Identikal, and fashion designer Erica Davies secure O-1 visas to set up their businesses in New York and Los Angeles respectively.
Nick Hayes says: "A lot of my friends have tried to make the leap across the pond and have failed. They get a culture shock because they think America is Britain, but it's not. It's a very foreign country in a lot of ways. But if you're a hard worker, you're talented and you want to go places, this is the country for you."
He reckons it's easier to find work in the US than in the UK, and crucially, there's no obvious class divide. "When we were 22 we did the art direction for a PlayStation magazine and that catapulted us into an arena with the big advertising agencies who thought, 'who are these wide boys'. I felt like I didn't belong. Out here the community doesn't care who you are or where you're from; if you're really good at something you'll get the work."
Davies concurs. "Working in the US and running a business is a lot easier than in Britain," she explains. "Doors open a lot quicker for you, everything is more accessible, and you're allowed to just be. You don't have to have lots of qualifications or to have gone through the ropes."
The only drawback, she comments, is the lack of flexibility. "It's interesting to see how the American way works differently to Britain because in the US it's all about producing, producing, producing. It's so much about consumerism and driving the money. It's very regimented—it's all about the work."
But, as Gillespie says, the Brits who've been tempted to "the next frontier" of America tend to make it with sheer audacity. "The US is an enormously exciting place, home to people who, just like you, wondered what they were made of and wanted to find out."