BRIAN COWEN and Peter Robinson have described a new initiative to potentially transfer thousands of jobs originally earmarked for the financial services sector in the Republic to Northern Ireland as a "win-win" situation for both economies.
Taoiseach-designate Mr Cowen travelled to Belfast yesterday to join first minister-designate Mr Robinson for the announcement that firms operating in the International Financial Services Centre (IFSC) in the Republic can establish offices in Northern Ireland to help them cope with the current skills deficit in the South.
The initiative is prompted by a shortage of graduate lawyers, accountants and economists in the Republic to fill posts in the financial sector, according to the departments of finance in the Republic and the North.
There are between 8,000 and 9,000 vacancies in the sector but not enough people in the South to fill them, said Mr Robinson.
In Northern Ireland, however, there is a surplus of such graduates, while many more based in Britain are anxious to return to the North, officials said.
Some financial analysts said that the initiative had the potential over a five-year period to create between 3,000 and 5,000 well-paid jobs in Northern Ireland, where the economy is over-dependent on low-paid jobs.
Mr Cowen said that the initiative would not require any new legislation and had the blessing of the Irish Financial Services Regulatory Authority which oversees the financial services sector in the Republic. Equally, he said, it did not contravene any European Union regulations.
Officials added that it would not have any major tax implications.
A spokeswoman for the Financial Regulator in Dublin said it had "no difficulty" with Irish-authorised firms in the IFSC branching out or outsourcing to Northern Ireland "provided such firms maintained the requisite level of expertise and experience to carry out their functions effectively and any such moves would not impede our ability to supervise them".
She said it was "not unusual" for authorised financial entities to provide services in other countries and that EU regulations permitted this. "The important thing here is that the home regulator will always be in a position to supervise effectively all the activities of the entity in question, including those relating to the other jurisdictions," she said.
Staff operating in the North would, in effect, service the companies based in the South.
Staff based in the North would pay tax to the UK exchequer, as do people based in the North working for Southern firms. Companies will continue to benefit by paying a lower corporation tax rate in the Republic, while the North would enjoy higher income tax receipts through job creation.
"It is a win-win situation for both jurisdictions in that we can work for the mutual benefit of both economies," said Mr Cowen.
On a day when the DUP selected Mr Robinson as DUP leader and first minister-designate, the taoiseach-designate indicated that the initiative could help the new Northern powersharing administration develop its own financial services sector.
"For the future there is every potential for Northern Ireland to further its growing reputation as a centre of excellence in the financial sector acting as a further bridge between the financial sectors in Ireland and the UK to the benefit of the island as a whole," he said.
Mr Robinson said the announcement could be the most significant "in decades" in terms of employment potential.
"It demonstrates how practical co-operation can lead to the benefit of the two economies . . . it can be a win-win result for our two economies," he said.
Mr Robinson said he and Mr Cowen had been working on the project for a number of months. It illustrated that "we have worked together and can work together".
"We want to ensure that there is the highest level of co-operation to the advantage of our peoples," added Mr Robinson. "There is a very steely determination on both our parts to ensure we get the very best for our people in Northern Ireland and the Republic of Ireland."
The International Financial Services Centre, which was established when Charles Haughey was taoiseach, is one of the key successes of the modern Irish economy. It has attracted some of the world's top financial companies, such as Merrill Lynch, JP Morgan (Chase), Citibank, Amro, and ABN Amro, which enjoy special tax breaks.
University of Ulster economist Mike Smyth said the political ramifications of the financial services sectors North and South moving closer together had little relevance in international finance.