Boris Johnson gets a slap in the face from his Brexit kipper
Business Week: also in the news were the budget, tax, fiscal prudence and Ardagh
Tory leadership hopeful Boris Johnson brandishing a kipper during a hustings debate this week
Wheeler-dealer Del Boy from BBC sitcom Only Fools and Horses used to use the quintessentially British expression “done up like a kipper” to taunt or rebuke those around him who had been misled or duped. The sight of Tory leadership hopeful Boris Johnson brandishing a heavily packaged kipper during a speech in London this week to erroneously lambast unnecessary EU regulation was almost too much to take.
Using the plastic-wrapped kipper as a prop, Johnson told the crowd of Conservative members that EU rules meant kippers from an Isle of Man producer could not be posted out to consumers without a plastic ice pillow.
“Pointless, expensive, environmentally-damaging health and safety, ladies and gentlemen,” he lamented. “We will bring the kippers back. It’s not a red herring.”
Except that it was, as an EU spokeswoman pointed out.
“The sale of products from the food business operator to the final consumer is not covered by EU legislation on food hygiene,” she said. “The case described by Mr Johnson falls thus purely under UK national competence.”
With the race for 10 Downing St nearing an end, both Johnson and foreign secretary Jeremy Hunt ramped up the rhetoric, both men declaring that the backstop must be removed entirely from the withdrawal agreement before it could be accepted. On the back of that hardened tone sterling fell to its lowest level against the dollar in more than two years and against the euro in six months. Separately, figures showed London home prices fell in May at their sharpest annual rate since 2009.
Then there was a report from the UK’s public finances watchdog which warned that Britain might be entering a full-blown recession. A no-deal Brexit, it said, could more than double its budget deficit next year, and add £30 billion a year to public borrowing.
The weakness in sterling is of particular concern to Ireland and its exporters. Investec’s Gearóid Keegan this week raised the prospect that sterling could move to parity with the euro “and possibly beyond” in the event of a “messy” no-deal Brexit. Figures from the Central Statistics Office this week showed the value of Irish good exports to Britain rose by nearly 10 per cent, or €486 million, to more than €6 billion in the first five months of this year.
In the House of Commons, MPs passed a backbench amendment to try to block any attempt by a future government to suspend parliament to force through a no-deal Brexit in what was seen as a pre-emptive strike against Johnson’s authority.
Meanwhile, in Strasbourg, newly-elected European Commission president Ursula von der Leyen – to jeers from UK MEPs – used her acceptance speech to say the bloc would back a further Brexit extension beyond October 31st “should more time be required”.
Donohoe spars with watchdog
The latest tussle between Minister for Finance Paschal Donohoe and the State’s budgetary watchdog played out this week as Donohoe rebuffed recent accusations of fiscal mismanagement.
The Irish Fiscal Advisory Council previously said Donohoe’s spending forecasts “lack credibility”, and suggested he is using unsustainable corporation tax receipts to plug holes in the health budget.
Donohoe this week insisted his spending plans were sustainable and prudent. He said his approach to “departmental expenditure ceilings” was sensible and informed by the experience of the crash.
Both sides will likely dig their heels in as the tug-of-war intensifies in the coming weeks and months ahead of Brexit and the budget in October.
The Government has already floated a number of potential budgetary measures. One of Taoiseach Leo Varadkar’s key taxation promises is to merge universal social charge (USC) and pay-related social insurance (PRSI). Somewhat embarrassingly the Department of Finance this week pointed out that this could be “inequitable” and lead to increased benefits for higher earners while middle-income taxpayers lose out.
Then there’s the Government’s pledge to raise the threshold at which the higher rate of income tax applies to €50,000. The department estimated this could cost the Exchequer €2.3 billion.
Major changes to the motor tax regime are also proposed. These involve an increase in the number of tax bands for Vehicle Registration Tax, changes to the grants and tax relief on hybrids and electric cars, and replacing the diesel surcharge.
And don’t forget the much maligned National Broadband Plan. Donohoe this week indicated that €200 million in tax revenue over the next two to three years would be required for it. He expects tax surpluses created over the period to be sufficient to pay for the project.
All the while the State’s coffers could come under pressure from Europe. France this week pushed ahead with a unilateral 3 per cent digital tax on Facebook, Google and other tech firms. The Government here is fiercely resisting the EU-wide plan.
Ardagh announces joint venture
After an eventful last couple of years for Irish-led bottle and can-maker Ardagh Group – from floating on the New York Stock Exchange in 2017 to raising billions of dollars on the markets – it this week announced details of its latest chapter.
The manufacturer led by Paul Coulson is to merge part of its food tin business with US group Exal to create a new multinational packaging group, Trivium, in a deal that will see the company receive $2.5 billion in cash that will be used to tackle its $8 billion debt burden.
Separately, Ryanair cut forecasts for growth in passengers next summer to 3 per cent, and confirmed it was looking at base cuts and closures from November amid delays in the delivery of new Boeing 737 Max aircraft.
Finally, Irish Life, the largest life insurance and pensions group in the Republic, dropped out of the race to acquire Dublin-listed property group Green Reit, narrowing the field of bidders to three a little over a week before a deadline for final offers.