Ireland’s GDP is up a stunning 26% this year via the ridiculous way GDP is measured.

Bloomberg reports Ireland Stuns World With 26% Economic Growth Rate.

Irish gross domestic product rose 26.3 percent in 2015, compared with a previously reported 7.8 percent, the Central Statistics Office said on Tuesday, adding that the revisions are partly linked to firms relocating to Ireland. Tax inversions artificially inflate the size of Ireland’s economy as all global profits may be counted as part of the nation’s gross national income when the headquarters of a group of companies becomes resident. Since 2008, corporate relocations have boosted that gauge by about 7 billion euros ($7.8 billion), according to Finance Ministry estimates.

Ireland GDP

Ireland GDP

Irish Success

How did Ireland achieve this success?

The answer is by having a lower corporate tax rate, and a better overall business climate than than most of the EU.

Corporate Tax Rates

Country Corporate Tax Rate % Highest Lowest
Austria 25 55 25
Belgium 33 48 33
Bulgaria 10 40.2 10
Croatia 20 20.32 20
Cyprus 12.5 29 10
Czech Republic 19 45 19
Denmark 23.5 50 23.5
Estonia 20 26 20
Finland 20 61.8 20
France 33.3 50 33.3
Germany 29.65 56.8 29.4
Greece 29 49 20
Hungary 19 50 16
Ireland 12.5 50 12.5
Italy 31.4 53.2 31.4
Latvia 15 29 15
Lithuania 15 20 15
Luxembourg 29.22 40.29 28.6
Malta 35 35 35
Netherlands 25 48 25
Poland 19 40 19
Portugal 21 55.1 21
Romania 16 38 16
Slovakia 22 45 19
Slovenia 17 25 17
Spain 28 35 28
Sweden 22 60.1 22
United Kingdom 20 52 20
Euro area Average 24.6 36.8 24.3
European Union Average 22.8 35.2 22.8

The above table created from Trading Economics data.

Ireland vs. EMU (Eurozone) and EU

  • Ireland Corporate Tax Rate: 12.5%
  • EMU (Economic and Monetary Union) Average Rate: 25.6%
  • EU Average Rate: 22.8%.

France Hopping Mad

The rest of the EU is upset at Ireland because of its low corporate tax rate.

And France is particularly upset at at the UK because Chancellor George Osborne just announced a corporate tax cut to 15%, undercutting most of the EU and Eurozone.

Amusingly, France’s finance minister, Michel Sapin, criticised the “manners” of George Osborne.

“I am not persuaded that this is a good thing for the UK,” the French minister said of Britain’s corporate tax plans at a press conference on Monday. “This will not change anything on the passport for instance. In fact, it’s not a good way to start a negotiation.”

Dealing With EU Mules

I billed that tax cut as the Precise Way to Start Negotiations with EU Mules: Get France to Piss and Moan.

My only objection is the UK should have cut rates to 10%, undercutting Ireland.

French Finance Minister Michel Sapin Pisses and Moans

Sapin

First Step in Training a Mule

There’s an old saying “The first step in training a mule is to hit it as hard as you can in the head with a stick.”

I don’t really advise that with mules, but it is the precise thing to do to EU nannycrats.

As a side note, Osborne will likely be tomorrow along with prime minister David Cameron who announced his resignation effective Wednesday.

Theresa May becomes UK PM on Wednesday. Along with Osborne, she got Brexit negotiations off on the right foot with her message “No Second Referendum, No Back Door Reentry”.

Theresa May

Reflections on Clearness

It’s clear that the UK can’t participate in the big decisions involving the EU’s future,” said Emmanuel Macron, France’s economy minister.

Well, it’s equally clear the EU cannot participate in big decisions involving the UK’s future.

And with his plan to cut corporate taxes, chancellor Osborne just hit nannycrat mules in Germany, France, and Belgium in the head with not a stick, but a brick.

Expect France to Whine About Ireland

France is already upset at the UK. This Ireland GDP report is sure to have France whining about the “unfair” corporate tax rate of Ireland.

I propose the EU make itself more competitive by cutting taxes instead of pissing and moaning about other countries that have better business climates.

Mike “Mish” Shedlock