Short-term pain for long-term gain?

So David Cameron has been banging the gong for Northern Ireland.

That's great so far as it goes, but the jury remains out on how much long-term economic benefit the G8 will provide to make up for all the short-term disruption.

Given this week's protests in central London the suspicion remains that a large part of the logic in picking Fermanagh is to find a venue as inaccessible to anti-capitalist protesters as possible.

Image copyright Pacemaker
Image caption The G8 summit will be held at Lough Erne golf resort in County Fermanagh

If so, the best analogy to draw might be with George Bush's visit in 2003 during the Iraq war.

President Bush met local politicians and made the right noises about consigning paramilitarism to the past.

But the main rationale for holding his summit with Tony Blair behind the walls at Hillsborough Castle appeared to be to keep both leaders far away from any mass anti-war demonstrations.

That's not to say the G8 won't have any impact on local politics.

The decision to hold the summit here provided an incentive for Stormont to do more than just paint over a few dilapidated shop fronts.

The timing of the first and deputy first ministers' shared future proposals was influenced by the impending gathering, and it's no coincidence that they are due in Downing Street on Friday, on the eve of the summit, to hear the details of the prime minister's 'quid pro quo'.

The exact nature of this "economic pact" between Stormont and the UK government is still unclear.

Earlier this week, the Financial Times speculated any deal would "include "proposals for enterprise zones, which provide tax incentives for investment in particular locations.

"Infrastructure guarantee schemes, already available in some parts of the UK, will be extended to Northern Ireland and a permanent structure will be established to boost lending to business."

That said, the first minister seemed unconvinced about enterprise zones when speaking in the assembly on Monday.

Regional aid

Peter Robinson warned that such zones might simply displace investment from one part of Northern Ireland to another.

One other item up for discussion is the level of regional aid for which Northern Ireland can qualify.

Currently, the EU proposal is that Northern Ireland should lose its 100% assisted status, a move that would radically reduce Invest NI's ability to offer attractive grants to potential investors.

Some sources suggest the UK government could back an extension of 100%-assisted status for the next three or four years. The question is due to be decided in Brussels later this month.

One thing which it's clear isn't going to be part of any economic pact is a cut in corporation tax.

During his Question Time on Monday, Peter Robinson remained wedded to the campaign for devolving the tax, telling MLAs he would press the UK government to implement the measure as soon as possible after it takes its final decision next autumn.

That stance appears predicated on the assumption that the only thing putting the treasury off giving the devolution of corporation tax a green light is next year's referendum on Scottish independence.

However, Stormont ministers should be mindful of the way in which the recent rash of stories about multi-national corporations shifting their profits around the world to avoid tax has changed the context,

Whilst Google and Amazon's tax policies in Ireland and further afield may not still be in the headlines in autumn 2014, concerns about profit shifting aren't going to go away.

Back in 2007, the former treasury official, Sir David Varney, wrote a review for Gordon Brown that brought the late Sir George Quigley's push for a corporation tax cut to a shuddering halt.

In his review, Sir David argued that "profit shifting would be a likely outcome of a reduced corporation tax rate in Northern Ireland".

The former treasury mandarin also set the issue in a global context, stating that bodies such as the European Union and the OECD were in favour of international financial stability.

Whilst lowering corporation tax in Northern Ireland "would not be defined as harmful tax competition", Sir David argued that it could be interpreted "as a manifestly aggressive move towards attracting cross-border activity by an already successful country."

All of which may help explain why, as he prepares to chair his first G8 summit and to persuade UK overseas territories like Bermuda to sign new tax treaties, the thought of opening up a new differential rate of corporation tax within the UK is not at the top of David Cameron's agenda.