The election of Donald Trump in the US poses a serious risk to inward investment in Ireland, PwC managing partner Feargal O’Rourke has warned.

Mr Trump has already signalled a more protectionist stance combined with possible changes to the tax code in the US, both of which threaten the current flow of foreign investment here.

“If a new protectionist trade approach is implemented, allied to a simplified US tax code, this could swing the balance towards investing in the US and represent a challenge for Ireland,” Mr O’Rourke said.

“However, we should not lose sight of the many non-tax advantages Ireland has to offer and we need to work hard to ensure our FDI offering remains first class,” he added.

Backlash

Minister for Finance Michael Noonan has already played down the likelihood of a major investment backlash on Ireland, noting most US elections throw up the promise of changes to the tax code without ever delivering.

Mr O’Rourke was speaking as PwC’s latest business barometer suggested Irish businesses had become more cautious in the wake of Brexit and Mr Trump’s surprise victory.

While 56 per cent of those surveyed were confident about future prospects, an increased 32 per cent confessed to being “apprehensive”

Almost three-quarters (74 per cent) said they expected their business to grow revenues in the year ahead, down from 88 per cent last year.

Growth is expected to be weaker in the coming year, however, with only 39 per cent expecting to grow revenues by more than 5 per cent, down from 62 per cent last year.

Uncertainties

“It is not surprising, given the range of geopolitical, economic and other uncertainties facing Irish businesses today that business leaders are feeling more cautious. Brexit and the changing US political dynamic are particularly front of mind,” Enda McDonagh, PwC assurance leader, said.

“That said, as a member of the EU and the Single Market, we have everything to play for. With a recovering domestic economy, continuing flows of FDI and a highly skilled English-speaking workforce, Ireland is a great location for continued investment and growth,” he said.

“ But as a country we need continued focus on maintaining our competitiveness and ensuring we have the right business environment for business to grow and succeed,” he added.