I was in the United States for the past week for the Irish International Financial Services Centre, meeting businesses with substantial investments and employment in the international financial sector all over Ireland , in Dublin , Cork, Arklow, Claremorris , Letterkenny and Carlow.
I visited Chicago, Minneapolis and New York.
The United States economy is recovering and the budget deficit is coming down.
The US budget deficit is around 6.4% of GDP, as against average Eurozone budget deficits of 2.7%.The Irish deficit about 7% of GDP.
The US economy is expected to grow by 1.7% this year, whereas the eurozone economy will contract by 0.8%. Ireland, unlike the rest of the eurozone will grow by 0.5%.
On the other hand the United States has a balance of payments deficit of 3.3%, against a eurozone surplus of 1.3%. Ireland’s balance of payments surplus is 3.5% of GDP, although this is mitigated by greater than average repatriation of profits.
There are limits to the extent to which a country can grow by importing more than it is exporting. But the United States has accessed new energy resources, which will help it a lot in the medium term. Europe is not in that position. It is, and will remain, a large net importer of energy.
Worries were expressed to me that the proposed Financial Transaction tax in some EU countries, and the generally more stringent pay limits in the financial sector, will divert some financial employment from Europe. Hyper cautious regulation may have the same effect.
There was high praise for the quality of the workforce available in Ireland, especially as regards their flexibility and maths skills.
I was told that the nature of work will change radically in coming years. Because of technological development, 80% of new job growth in the US will come in firms now employing less than 5 people. This plays to Ireland’s strengths, in that it is easier to set up a new business in Ireland than it is in most of the rest of the world.