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The UK government’s decision to opt out of the new fiscal rules in the eurozone has its fair share of critics locally (even if it has won cautious approval from the electorate), but in Ireland there are concerns that thousands of jobs could be at risk as a result of the move.

If the UK doesn’t participate in eurozone-wide financial transaction tax (FTT), it gives the City a tremendous advantage over other European countries and poses a threat to the IFSC. Jobs in Ireland would be put at risk, and any investment by international financial services firms would be severely hampered.

This is the view of IDA Ireland, the body set up to promote inward investment into the country, and Fianna Fáil finance spokesperson Michael McGrath. The Irish Banking Federation says that it if a FTT was imposed in the eurozone without Britain it would be “opposed to it completely”.

This is particularly concerning for financial services jobs in Ireland, not just because the IFSC currently employs 33,000 people, but because the government has plans to add an 10,000 new posts in the international financial services district over the next five years and therefore needs to remain attractive.

But is it as simple as this? Obviously David Cameron’s hard-line stance was, in theory, designed to protect the Square Mile and the 250,000 jobs in places like Birmingham and Scotland. However, it’s questionable whether the City won’t suffer anyway.

Generally, it’s arguable that Cameron has simply lost the UK’s place at EU table while increased regulation of the financial services industry continues at breakneck speed regardless.

Olli Rehn, Europe’s economic affairs commissioner said today: “If [Britain's] move was intended to prevent bankers and financial corporations of the City from being regulated, that’s not going to happen.”

On the specific question of the financial transaction tax, some lawyers have suggested to our UK site that the tax will be levied based upon the domicile of the institution, not the location of the trade. This means any banks with a European HQ would be impacted, even if they’re doing the trades in London.

There’s also the fact that much of the work being carried out in the IFSC is back office-related, and one of the key lures to international financial services firms is the relatively low cost of operating in Ireland.
Corporation tax, should it survive at its current 12.5%, has persuaded many firms to set up in Dublin, but it’s the availability of plentiful and comparatively cheap expertise that has prompted many to expand.

As one senior executive in a large funds firm told us: “The reasons to do business in Ireland are as valid as ever. There’s a wonderfully capable service environment on a huge scale here, with over 11,000 people in the industry. There’s the quality and breadth of expertise here that you can’t find anywhere else in the world.”