US companies in 'absolute confusion' over No vote, says Microsoft's Rellis

IRELAND'S REJECTION of the Lisbon Treaty has not yet had a material impact on inward investment, but the No vote has caused "absolute confusion" at board level in US companies as to Ireland's future participation in the EU, which may affect future investment decisions, Paul Rellis, managing director of Microsoft Ireland, told an Oireachtas committee yesterday.

"I think that the No vote has sent a strongly negative signal of intent not only to our European counterparts, but also to the many multinational companies who locate in Ireland because of the access our location and our participation in the EU provides," he told the Oireachtas sub-committee.

While he acknowledged that he has not seen any direct evidence of investments being lost, he said it is a long-term issue and is a negative factor which will cloud people's judgment. "International investors look for certainty and any time this certainty is clouded it impacts on investors' views of where they should invest. I think that the fall-out in the aftermath of the referendum has potentially tarnished that good standing which has taken many years hard work by Ministers and officials."

Mr Rellis also said that Ireland's influence in Europe has been weakened as a result of the No vote, and that "we need to consider how this can be rectified as this outcome will be detrimental to our continued growth and prosperity".

When asked his thoughts on the possible impact of tax harmonisation in Europe, he said that if it did come to pass it would be "extremely problematic" for foreign investment in Ireland if it was introduced at a rate greater than 12.5 per cent.

Of the current global financial turmoil, he said that the challenges being experienced and the impact in Ireland have demonstrated the benefits of being part of the euro zone and have highlighted the positive impact of having the support of the ECB.