Arrival of world's biggest meat producer shouldn't skew Irish GDP

An increase could leave us liable to pay the EU more...

Arrival of world's biggest meat producer shouldn't skew Irish GDP

A leading Irish economist has moved to allay fears that the decision of Brazilian food giant JBS to set up its HQ in Ireland could distort the country's gross domestic product (GDP), the Irish Times reports.

Davy's Conall Mac Coille said that the relocation of over €30bn in assets to Dublin would not affect the State's headline growth metrics, so long as patents or copyrights were not included.

It would be unusual for a food processing company to include such patents.

The assets should be listed under "direct investment abroad" and not impact on the domestic activity dealt with by GDP.

Mac Coille told the Irish Times:

"It doesn't matter who owns the company, it's whether the output is considered to be produced in Ireland."

However, he noted it was impossible to predict whether or not Ireland could face a greater obligation to the EU's budget due to JBS's presence here.

While profits will flow into the new Irish entity, they are also likely to flow out as shareholder dividends. This would mean the gross national income, which determines the country's financial obligation, could be zero.

The subject of Irish-based multinationals impacting on GDP hit the spotlight recently when the Central Statistics Office (CSO) controversially announced 2015 growth to be a massive 26.3%.

The fact the CSO had included income accrued from patents and copyrights domiciled in Ireland as net exports was dismissed as "leprechaun economics" and concerns over what the headline rate would mean for our EU contributions followed.

JBS is the parent company of Moy Park – the chicken processors who employ thousands in Northern Ireland – and is the world's biggest beef producer.

The Irish News reported this week that Ireland's 12.5% corporation tax is believed to have been a significant factor in convincing the company to come to the 26 counties.

Northern Ireland has been granted to power to match Dublin's rate, but this will happen during April 2018 at the earliest.

The new firm will be listed on the New York Stock Exchange and will be called JBS Foods International.

According to the Wall Street Journal's reports, the firm is yet to decide on an exact location.