If Ireland is railroaded to accept a corporation tax rise, expect recruitment to grind to a halt

With the majority of recruitment in the financial sector currently coming out of the IFSC, a proposed uniform EU corporation tax rate would be very bad news for employment.

Ireland's new government is facing a tough early test - potentially ceding an increase in its corporation tax rate in return for less punitive rate on its EU-IMF debt burden. The European Council has said it "intends to present legislative proposal on a common consolidated corporate tax" across the eurozone.

The EC is due to publish its proposals tomorrow, and of course Ireland has long battled attempt by France and Germany to increase its 12.5% corporate tax rate, but any rise would be something of a blow to financial services job prospects.

The IFSC employs over 32,000 people across a range of industries - the largest proportion in banking and funds - on an average salary of €60.1k and accounts for 36% of corporation tax receipts, according to a recent IBEC report.

Many of these firms would have be lured to Ireland, and inspired to expand, on the back of Ireland's long-standing low corporation tax rate.

And, while Ireland's banks continue to roll out redundancy plans, firms in the IFSC are still recruiting.

"There have been some big hiring plans from multinational firms in Ireland, particularly within fund administration and banks' transaction services divisions," says Eoin Blake, director of headhunters Lincoln Search & Selection. "And while it hasn't been entirely positive, most firms have resisted making cuts. A rise in corporation tax can't be viewed as anything other than a negative for multinational expansion plans."

Add in the fact that the rise would also scupper the inward investment required for the 'green IFSC' - Ireland's bid to get ahead in carbon and green finance, which could eventually create 4,000 jobs, and a cornerstone of Fine Gael's election campaign - and it's clear why justice minister Alan Shatter has maintains that the move is "off the table".

Still, as the yield on five-year irish debt spiked to above 9.9% yesterday, pressure is mounting to secure less punitive rates on the €85bn EU-IMF bailout. Corporation tax could yet prove a sticking point.