Business

Economic shocks and geopolitical risks are new norm ‘in line with the sweep of history’, says Paschal Donohoe

Minister for Public Expenditure works the room at a high-powered gathering of Irish business leaders in the City of London

Paschal Donohoe, the Republic's Minister for Public Expenditure and the president of the Euro group of finance ministers, in London on Friday. Photograph: Chris Ratcliffe/Bloomberg

Mark Paul
Fri May 17 2024 - 19:03

The succession of shocks and geopolitical risks that have hit the economy in recent years should not be seen as aberrations, Paschal Donohoe, the Minister for Public Expenditure, told a high-powered gathering of Irish business leaders in London on Friday.

Instead, the upheaval from wars and other unexpected events marks the return of a form of economic uncertainty that is “in line with the sweep of history,” and are simply challenges with which businesses and governments must cope, he said.

Mr Donohoe was at the Mansion House in the City of London’s financial district for a fundraising lunch for the Britain branch of the Ireland Funds philanthropic organisation. Event organisers pressed the 250 wealthy business leaders in the room for donations towards the Ireland Funds’ charitable activities; pledges appeared to be hurtling towards the £100,000 (€117,000) mark even before the lunch main courses had hit the tables.

The crowd could well afford it. Among the high-profile business figures on the guest list were former BP chief executive Bernard Looney; Cathal Deasy, the global head of investment banking for Barclays; Laing O’Rourke chief executive Ray O’Rourke; and Jeremy Masding, the former chief executive of Permanent TSB.

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Alison Rose, the former NatWest chief executive who oversaw Ulster Bank’s exit from the Irish market, was also at the event, along with senior executives from Bank of Ireland, law firms McCann FitzGerald, Mason Hayes and Curran, William Fry and Arthur Cox, as well as Powerscourt, the strategic advisory firm founded by Rory Godson, who recently sold it for an estimated £50 million.

“We were in a period of moderation that was unique” before the last big financial crash of 2008, Mr Donohoe said, as he warned that geopolitical upheaval was the norm earlier in the 20th century and would be the norm again going forward. He insisted the Republic’s economy would cope with whatever was thrown at it.

In an onstage chat with Mr Godson, who is a former Sunday Times senior editor, Mr Donohoe reiterated his warning that he was “absolutely certain” Ireland’s corporate tax bonanza would end in the years ahead. He said his belief receipts would decline was why the State had run budget surpluses, which also increased the State’s credit rating for future borrowing.

“We need to make sure we have the money to cope with that change [falling corporation tax] when the time comes.”

Mr Donohoe also paid a warm tribute to Martin Fraser, the Republic’s ambassador to Britain, who was previously for 11 years the secretary general of the Department of the Taoiseach throughout crises such as the Covid-19 pandemic.

The Minister described Mr Fraser as “one of the greatest public servants Ireland has ever had”, drawing applause from the room. The ambassador, well known for his scrupulous avoidance of publicity when he was the State’s top civil servant in Dublin, looked stunned as Mr Donohoe joked Mr Fraser would “kill him” when he got back to their table. “And I have to sit next to him.”

Speaking to The Irish Times after the event. Mr Donohoe said he believed the current Government Coalition could win the next general election, which is expected within the next 11 months.

“We’re in it to win it,” he said, after a poll from The Irish Times this week showed support for Sinn Féin had fallen by 5 percentage points, with Fine Gael now neck and neck with its rival.

Mark Paul

Mark Paul

Mark Paul is London Correspondent for The Irish Times

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