With the publication of the latest strategy for Ireland’s international financial services sector, the expectation that Ireland can secure some concrete financial projects in the wake of the UK’s exit from the European Union is mounting.

In recent days it has been reported that US bank Citi will move up to 100 jobs out of London, with Dublin a possible candidate, while a host of other potential movers have also been put in the frame.

Launching the report on Monday, Eoghan Murphy, the Minister of State at the Department of Finance, added to this narrative, remarking that there is “huge interest” from companies considering re-locating from London to Dublin.

Thankfully our offering has improved since the days when the IDA was first charged with promoting financial services back in 1987, and a key selling point was the country’s “young, enthusiastic, educated and computer literate people”. However, there are still many uncertainties surrounding how and when UK-based companies will actually respond to Brexit, and what this might mean for Ireland.

Indeed while the latest IFS 2020 report, which points to the potential to create 10,000 jobs over the next three to four years, and highlights opportunities in blockchain, crowdfunding, and fintech, gives reasons why Ireland might succeed, there are possibly as many reasons why it won’t.

The jobs won’t actually move

It’s difficult to ascertain exactly what is going on in amidst the posturing and lobbying of financial services companies.

Murphy himself told RTÉ radio that banks are unlikely to make “wholesale moves” to Dublin, and while the Central Bank has indicated that any companies looking to move here need to put “substantive” operations on the ground, it’s unclear what this might actually mean in terms of job numbers.

UK-based asset managers for example can move fund ranges to Dublin, from where they will then be able to sell their fund ranges across Europe, without the need for substantial office space – or employees.

And Dublin hasn’t exactly been a hotbed of new arrivals in recent years; figures from the Central Bank for example show that there were just two new financial services companies authorised in 2016 – a Munich Re-backed insurer, Queen Street, and Sofinsod, a subsidiary of Sodexo.

The competition is intense

From Paris to Amsterdam, to Frankfurt to Warsaw, cities across Europe are vying for the spoils of a flight in business from London. For high-value front-office trading activities, larger financial centres such as Paris and Frankfurt have frequently been cited, while low cost cities such as Warsaw – which is already used by many Irish-based funds companies as a low-cost outsourcing hub – are also in the frame. Goldman Sachs for example is understood to be considering both Frankfurt and Warsaw.

Amsterdam has taken a different tack, and is targeting specific sectors such as clearing, fintech and high-frequency trading.

Income tax is too high

Despite progress being made in the past two budgets to bring personal tax rates in Ireland back in line with international norms, Ireland continues to have high personal tax rates. Tax experts say Ireland falls down in two key areas; the level at which you start paying the top rate of tax (€32,800 ) and the scale of the top tax rate (52%).

Indeed one prominent tax expert who regularly advises multinationals on their investment decisions says he can feel companies lose interest in Ireland the minute he starts talking about a top personal tax rate of 52 per cent.

Consider someone earning £100,000 in London; in the UK this salary equates to take-home pay of £5,456 a month but in Dublin, a €100,000 salary would leave a single person with just €5,073 a month. And while the cost of living is obviously lower in Ireland, no-one enjoys paying more tax.

Availability of schools

Easy availability of quality schools has long been a critical decision factor for executives when making re-location decisions. The issue is addressed in the latest action plan: “Provided there is the potential to expand international schooling provision in Ireland, it should be possible to meet the demand arising from overseas executives and professionals (including expatriates) moving to work and live in Ireland.”

However, there are no concrete steps outlined in the report to close any gaps that may exist.

The greater risk

If Ireland loses the battle for any business that does re-locate however, the damage could be far greater than just the missed opportunity. The greater risk, perhaps, is the loss of the strong links that financial services companies have built up with their counterparts in London. Now, when a UK-based asset manager is looking to set up a cross-border fund, Dublin, rather than Luxembourg, perhaps, is the most obvious choice. Or when a structured finance specialist is looking to establish a Special Purchase Vehicle (SPV), again Dublin might win out over Luxembourg. But if this business relocates to the continent, a Paris- or Frankfurt-based operation, staffed by locals, may have closer links with a centre such as Luxembourg – not Dublin.