CSO statistics point to annual fall of 3.2 per cent in production in September
about 12 hours ago
The latest figures from the CSO showed production on a monthly basis was 0.4 per cent higher in September. Photograph: Qilai Shen/Bloomberg
Irish manufacturing output fell by 3.2 per cent on an annual basis in September amid concerns over the impact of Brexit on exports.
The latest figures from the Central Statistics Office (CSO) showed production on a monthly basis was 0.4 per cent higher in September.
The “modern” sector, comprising high-tech and pharma companies, recorded a monthly increase in production of 0.2 per cent and an annual decrease of 2.3 per cent.
However, there was a monthly decrease of 1.1 per cent in the “traditional” sector and an annual decrease of 10.4 per cent.
“There have been worries about the fall in sterling against the euro since the Brexit referendum and its potential negative impact on the industry’s exports, of which just under a half go to the UK,” Merrion economist Alan McQuaid said.
Business Today: The best news, analysis and comment from ‘The Irish Times’ business desk
about 16 hours ago
A trove of 13.4 million records exposes ties between Russia and US President Donald Trump’s billionaire commerce secretary, the secret dealings of Canadian Prime Minister Justin Trudeau’s chief fundraiser and the offshore interests of the queen of England and more than 120 politicians around the world.
The files contain information on the affairs of AIB’s offshore operation, some of Ireland’s wealthiest businessmen and most prominent businesses, celebritiesfrom the arts world, and even an Irish priest who played a role in offshore holding companies linked to valuable assets. The data also contains new information on the role played by Ireland in structures that allow some of the world’s most profitable corporations significantly reduce their tax bills. Reports on these issues will be published by The Irish Times over the coming week.
With less than two years to go to Brexit, an overwhelming 95 per cent of businesses in Ireland are still not actively planning for the event, according to cross-Border development agency InterTrade Ireland. It comes amid concerns about preparations in the insurance sector for Britain’s exit as well.
As the housing crisis continues to mount, new projections show the Government will spend in excess of €3 billion on rent subsidies over the next five years. Eoin Burke-Kennedy reports on the rising cost of rent subsidies, which opponents warn ultimately go to private landlords and fuel rent rises.
Consulting firm EY, which now employs almost 2,400 people in Ireland, expects headcount to continue to grow after reporting double-digit income growth for the fourth consecutive year.
With over 60,000 techies expected to converge in Lisbon for the Web Summit this week, Charlie Taylor reports from the event on the likely highlights.
Finally, in his column this week, Chris Johns assesses whether populism can be countered by the global economic recovery, while Pilita Clark looks at the growing trend for firms to offer employees unlimited holidays, and why it’s hard to think of another work perk that promises so much and delivers so little – to workers.
Figure represents 25% rise on previous period and reflects shift away from social housing
about 17 hours ago
The combined cost of the three main rent support programmes – rent supplement, the housing assistance payment and the rental accommodation scheme – is expected to be some €535m this year
The Government will spend in excess of €3 billion on rent subsidies over the next five years, according to official projections. This represents a 25 per cent pick-up on the previous five-year period, and reflects the Government’s increasing preference for using the private rental sector to accommodate lower-income families rather than social housing.
The combined cost of the three main rent support programmes – rent supplement, the housing assistance payment (Hap) and the rental accommodation scheme (Ras) – is expected to be in the region of €535 million this year.
Assuming the Government’s own projections for the number of tenancies expected to be availing of these schemes in the coming years, this will rise to €714 million in 2021.
An additional 12,013 households have already applied for rent support under the Hap scheme so far this year, equating to 280 a week, bringing the total number of active Hap tenancies to 28,506 in October. According to the Government’s Rebuilding Ireland strategy, this figure is expected to rise to 83,760 by 2021.
The scheme, initially run on a pilot basis in Limerick in 2014, has now been rolled out nationwide, and is designed to gradually replace rent supplement.
Calls for NCT-style inspections for rental properties
US firms warn housing crisis could harm Ireland’s competitiveness
Dublin council ‘needs 100 inspectors’ to tackle rental overcrowding
The cost of State-subsidised rentals – often referred to as social housing solutions – has risen significantly in several countries, including Ireland, over the past decade as governments shift from “bricks to benefits” to deal with the lack of affordable housing.
Anti-poverty campaigners insist that without the various rent subsidies thousands of families would be left homeless.
Opponents counter that the subsidies ultimately go to private landlords and fuel rent rises, and that the money could be used to build social housing directly.
“In order to ensure that all of the households currently on the housing waiting lists are accommodated, the reliance on the private sector will be necessary until the [social housing] build programme reaches a critical mass in the latter years of [the Government’s] Rebuilding Ireland strategy,” a Department of Housing spokesman said.
He also said that in the latter years of the delivery programme the number of households accommodated annually under Hap and Ras would fall as the build programme increased.
“Over the lifetime of Rebuilding Ireland some 137,000 households will have their housing needs met. Of this, 50,000 will be housed in new build, acquired, refurbished and leased homes.”
However, Sinn Féin TD and spokesman on housing Eoin Ó Broin said: “The Government’s housing plan represents a very significant shift away from the direct provision of social housing, and towards a policy of indefinitely subsidising social housing tenants in private rental accommodation.”
He said of the 136,000 “social housing solutions” promised in Rebuilding Ireland, only 42,500 were real social houses owned by local authorities or approved housing bodies.
“This means that 93,500 tenancies, almost 70 per cent of the total, are subsidised private sector tenancies, the overwhelming majority of which are for just two years.
“This is bad for tenants as it deprives them of real security of tenure, it is bad for communities as it promotes transience, and it is bad for the taxpayer as in the long term it is much more expensive than the provision of real social housing.”
European Commission has begun proceedings against Ireland for delay
about 17 hours ago
The European Commission launched its fourth anti-money laundering directive in June of this year. Photograph: iStock
The European Commission has begun infringement proceedings against Ireland for its failure to implement on time a directive aiming to clamp down on money laundering activities and terrorism financing.
An EU spokesman told The Irish Times the infringement proceedings began in July of this year after Ireland did not transpose the legislation in time, which should have come into force on June 26th. Those proceedings, taken against 17 countries in total, could ultimately result in Ireland facing a fine from the European Union. Persistent non-compliance could end up with Ireland being referred to the European Court of Justice.
Ireland’s delay in implementing the fourth anti-money laundering (AML) directive was caused by proposed amendments following the publishing of the final text of the directive in 2016. According to a parliamentary response from Minister for Finance and Public Expenditure Paschal Donohoe, Ireland was awaiting the outcome of negotiations on those proposed amendments but discussions didn’t progress “sufficiently”, he said, and the deadline ultimately passed.
One of the more significant purposes of the AML legislation is the requirement of corporate entities to keep information on individuals holding ultimate beneficial ownership of companies, according to Damien Barnaville, a financial services partner at law firm LK Shields. Mr Barnaville said this measure was a “push toward transparency” so people can properly ascertain who ultimately holds shares in a company. Mr Barnaville noted that, at present, shareholder registers show who holds portions of companies, but don’t necessarily convey who the beneficial owners are. For example, one person can hold shares on behalf of another and that other person is not listed on a share register. This legislation also updates the third AML directive introduced in 2010, Mr Barnaville said.
To that end, this EU directive could help to improve transparency and prevent tax avoidance, as well as strengthen existing rules opposing money laundering and terrorism financing, according to the European Commission.
Commenting on the implementation delay, Sinn Féin finance spokesman Pearse Doherty, who raised the issue in a parliamentary question, said: “[The Government] are looking for credit for agreeing to implement something they are legally obliged to do and which the Government are so overdue in doing, the commission is taking legal action. You couldn’t make it up.”
As to when the law will be transposed, it is expected to be later this year having been “identified as a priority for publication”, according to a Department of Justice spokesman.
“This is a complex piece of legislation, which has required consultation with and input from various Government departments and agencies. This work is now nearing completion and it is expected that the draft Bill will be brought to Government for approval before the end of the year,” he added.
On the issue of the infringement proceedings, the spokesman said the department responded to the commission’s formal notice in July, advising them that the Bill would be published in the autumn parliamentary session. “No further correspondence has been received from the commission in this regard,” he said.
Report by InterTrade Ireland highlights lack of preparedness of firms
about 22 hours ago
Despite the uncertainty of Brexit, the InterTrade Ireland report suggests cross-Border trade is thriving
With less than two years to go to Brexit, an overwhelming 95 per cent of businesses in Ireland are still not actively planning for the event, according to cross-Border development agency InterTrade Ireland.
The finding, contained in its latest quarterly business survey, suggests most firms here are still adopting a wait-and-see approach to potentially the biggest shake-up in trading relations between the UK and Ireland in decades.
The agency said planning for Brexit remained a “real concern”, particularly as 22 per cent of all business on the island and 41 per cent of cross-Border traders say it is already having a negative impact on their business.
Despite the uncertainty of Brexit the agency’s report suggested cross-Border trade was thriving, with half of traders experiencing business growth compared to 36 per cent of businesses only doing trading in their own jurisdiction.
The survey found the increased growth, however, was not translating into a equivalent rise in employment, with only 7 per cent of firms reporting that employment levels have increased over the past quarter.
The reluctance to take on new staff against the positive market background may signal an improvement in productivity but may also reflect difficulties in recruiting appropriate skills, the agency said.
IT and finance firms here have been vocal about their difficulties in finding skilled staff.
In its report InterTrade Ireland also highlighted cost increases in overheads and through the supply chain as significant challenges facing businesses.
“A buoyant economy should not distract from the need to confront and prepare for challenges that lie ahead, especially in terms of dealing with rising costs, skills shortages and potential changes to trading relationships,” said Aidan Gough, strategy and policy director at InterTradeIreland.
Mr Gough said that over 70 per cent of businesses were operating on very tight margins – below 10 per cent – and therefore carry a high exposure to rising costs.
“While we encourage businesses to concentrate on the day job and operational effectiveness, we also advise companies to use this time strategically to look at the possible impacts of Brexit,” he said.
“By asking relevant questions and working through different scenarios, businesses which have proved resilient in the past will discover new solutions and opportunities in the challenges that lie ahead,” Mr Gough said.
“With a healthy ambition to grow reported by 51 per cent of firms across the island, we are encouraging SMEs to plan, act and engage in preparation for Brexit as this is the key to stability and success in the future.”
Chris Johns on whether the global economic-political order is at an inflection point
Sun, Nov 5, 2017, 13:58
Updated: Sun, Nov 5, 2017, 14:03
Trumpism: Given US hostility to any kind of welfare state it is unsurprising that nativism, populism and all the other isms are so evident. Photograph: Jim Watson/AFP/Getty
What’s to be done about populism? Explaining the rise of Donald Trump, Brexit, various European demagogues and neofascists, and Jeremy Corbyn has become, well, popular. That’s hard enough, of course, but not so difficult as figuring out how to solve the problem. If there is an impression that the rise of populism has been checked it is one that arises only because the global economy is booming. Just wait until the next recession.
Among thoughtful economists a clear theme has emerged, one that is put well by Martin Sandbu of the Financial Times: “The future of western democracies hinges on whether centrist political forces can offer an economic policy in which the left-behind can believe.” That’s a big claim: our political and economic futures rest on getting the response to populism right.
One simple idea is that the gains from globalisation should be better redistributed via taxation and welfare policies
The Harvard professor Dani Rodrik pushes similar ideas. Globalisation and technological change lead to winners and losers. Economists mostly focus on the winners. Partly because that’s where the money and career prospects lie, but also because to pay attention to losers risks getting into bed with protectionists and socialists. In any event, losers haven’t been numerous enough to worry about and rarely cause very much trouble. Until recently, that is. Rodrik echoes Sandbu’s concerns about the future: “The world’s economic-political order appears to be at an inflection point, with its future direction hanging very much in the balance.”
The point about losers is an important one. Listening to free-trade zealots in the UK, for example, we might be forgiven for thinking that trade liberalisation is a win-win game. Economists have known for more than 60 years that this is simply not true. Lowering trade barriers always risks causing some harm, usually to unskilled workers. The key insight is that free trade is a good idea but is one that comes with large distributional implications: somebody’s job is lost. Choosing not to worry about this is all very well. But it is ethically unfair and politically stupid. As Hillary Clinton and David Cameron have discovered.
One simple idea is that the gains from globalisation should be better redistributed via taxation and welfare policies. Given the United States’ hostility to any kind of welfare state it is unsurprising that nativism, populism, Trumpism and all the other isms are so evident. Of course, some countries actually do redistribution quite well. Recent IMF data confirm that Ireland does as much or more than any other country to reduce income inequality.
Sandbu restates the ideas of the Nobel economics laureate Jean Tirole and argues that the welfare state should protect workers, not jobs. In other words free up the labour market to allow as much hiring and firing as companies want, but make sure that welfare payments and, critically, retraining measures are in place to provide economic security and maximum chances of finding another job. This is done in places like Sweden and Denmark. Supporters of Scandinavian and Nordic-style social democracy are often surprised by how easy it is for companies there to shed workers. By international standards Ireland’s labour market is also extremely flexible, although more “job activation” policies could be explored in the interests of helping the longer-term unemployed back to work.
The other main idea is rather more old-fashioned: economic policies should be fashioned to produce high growth rates so that wages actually begin to rise. It is a wonder of the modern age that so many countries have forgotten what high growth and tight labour markets look like.
Welsh Leave voters who complain the EU does nothing for them were told how much money Brussels gives them every year. A typical reply was, ‘I don’t believe those numbers’
Economics is one driver of populism. Thinking about the various initiatives, often involving large amounts of state aid, provided to poorer regions of Europe, I wonder whether the answer is simply “more”. Parts of south Wales are among the most economically deprived regions of the UK. But considerable amounts of cash do not seem to have had much impact. Populism, in the form of a Brexit-voting population, is all too evident. Recent research into why the Welsh valleys voted to leave the European Union revealed immigration to be the number-one concern. Yet foreigners make up only 2.2 per cent of the Welsh population, compared with 36.8 per cent in Remain-voting London. Welsh Leave voters who complain that “the EU does nothing for us” were told about the amount of money that Brussels gives them every year; a typical reply was, “I don’t believe those numbers.” The origins of beliefs are clearly important here, not just welfare payments. Both social and old media have a lot to answer for.
Simon Kuper of the FT brilliantly describes the Brexiteer wing of the Tory party in terms of modern-day followers of a “cargo cult”. Weird adherence to tribal mythologies leads to disastrous outcomes. How did these posh boys with their Oxford degrees find common cause with the Welsh working class? How did they persuade them to vote to be even poorer than they are now?
Brexit and global corporation-tax reform threaten Ireland’s economy. Perhaps the Irish advantage that IDA Ireland should market more heavily is Irish political centrism: populism isn’t a major part of the political landscape. That may become as attractive to a multinational as a low corporation-tax rate.
Mark Carney had painted himself into a corner and a rate rise now could backfire
about 17 hours ago
Governor of the Bank of England Mark Carney: failure to follow through this time would have cemented his reputation as the master of mixed messages. Photograph: Stefan Rousseau/AFP/Getty Images
Since taking over at the helm four year ago, Bank of England governor Mark Carney has laid the groundwork for an interest rate rise on several occasions only to pull back at the last minute, prompting the barb “unreliable boyfriend”.
Until this week he’d only delivered one rate change during his time in charge, a rate cut in the wake of last year’s Brexit referendum.
Nonetheless, having carefully prepared the markets for the UK’s first rate hike in 10 years, there is now growing concern that he may have got it wrong.
While UK inflation hit 3 per cent in September, above the BoE’s 2 per cent target rate, this is being driven by the Brexit-related slump in sterling and not by underlying prices and wages, normally the target of rate changes, which have remained sluggish.
Hence rates are going up when real incomes are being squeezed, which may dampen personal consumption, the engine of the economy, just as the UK heads down the wormhole of Brexit.
After the BoE last increased rates in 2007, it was forced to quickly double back on itself, cutting them by 4.75 percentage points in the following 18 months as the financial crisis plunged the UK into recession. Might latest increase also prove a mistake?
Rock star banker reputation
The problem for Carney is that he has painted himself into a corner by continually promising to increase rates without delivering. Failure to follow through this time would have cemented his reputation as the master of mixed messages, a far cry from the rock star banker reputation he enjoyed at the beginning of his tenure in charge.
Raising the UK interest rate for the first time since July 2007 should have been a show of strength, a milestone in the country’s recovery from the crash. Instead, the quarter-percentage point increase merely cancels out the cut that followed last year’s referendum.
The Brexit conundrum has undoubtedly changed the economic outlook and Carney littered Thursday’s press conference with references to the extraordinary circumstances the BOE is facing, saying these are “exceptional” and “not normal” times.