Boris Johnson’s ta-da moment fails to materialise in Manchester
Business Week: also in the news are Budget 2020; the economy; and fossil fuel struggles
UK prime minister Boris Johnson delivering his speech on the final day of the Conservative Party conference. Photograph: Getty Images
The UK may be standing on the precipice and just weeks away from stepping off, but prime minister Boris Johnson was nonetheless cheered into the auditorium and indeed on to the stage by party colleagues at this week’s Conservative Party conference.
This was to be Johnson’s ta-da moment: the moment when all the naysayers and disbelievers were to be put firmly in their boxes, and the rabbit yanked triumphantly from the hat.
At last Johnson was to reveal his “final proposal” to do away with the dastardly backstop, while at the same time satisfying the demands of Brussels and Dublin to protect the single market without the need for checks and customs infrastructure at the Border.
But, alas, it wasn’t to be.
The plan, such as it was, would mean Northern Ireland leaving the customs union – the bloc’s tariff-free trading area – but remaining aligned with the EU’s single market rules for at least four years, with a border running down the Irish Sea.
As a confused Taoiseach Leo Varadkar pointed out, customs checks at the Border would be unavoidable if the Republic and Northern Ireland were in separate customs unions. In effect, Johnson’s plan would create two borders.
That being said, Dublin and Brussels were keen to keep open the lines of dialogue, and while Varadkar made clear the proposals do not meet the requirements of the backstop all parties nonetheless promised to consider them carefully.
Opposition parties in the House of Commons had no such qualms, though, with Labour leader Jeremy Corbyn describing the proposal as worse than the deal negotiated by Theresa May, while the Liberal Democrats said it was “ludicrous”.
In fairness to Johnson, he later rowed back on the suggestion this was the “final offer”, instead describing it as “a broad landing zone” for agreement. The hope now is he will do what he does best and perform a U-turn on his insistence there will be no extension.
Back home the Government was warned it could face a bill of almost €1 billion in extra unemployment benefit over the next decade in the event of a disorderly Brexit. The Parliamentary Budget Office said a no-deal Brexit could hit the coffers by €6.5 billion.
Our new Central Bank governor, Gabriel Makhlouf, warned that all Brexit outcomes would be damaging. “The fall in the value of sterling has been the main channel which we have seen the economic effects of Brexit act to date,” he pointed out.
Budget to reflect Brexit realities
It’s probably the least keenly anticipated budget for many years, overshadowed by events in London, but Minister for Finance Paschal Donohoe will nonetheless take to his feet in the Dáil on Tuesday to set out the taxation and expenditure for the coming year.
The truth is he doesn’t have a lot to work with anyway. It will be framed as a “no-deal Brexit” budget, with about €2.8 billion in measures set to be announced, albeit with €2.1 billion effectively already allocated.
Donohoe got something of a boost this week as exchequer figures showed corporate tax take was almost 11 per cent ahead of target at €5.84 billion for the first nine months of the year.
Total taxation rose by 8.7 per cent to €40.8 billion for the period, coming in 1.7 per cent ahead of forecasts, helping the exchequer to edge into a surplus of €38 million so far this year.
While the economy is generally continuing to perform well, Brexit was blamed as manufacturing activity worsened for the fourth month running in September, while business activity in the services sector fell to its lowest level since May 2013.
There are also headwinds coming from the west as well as the east. Irish food and beverage products, including Kerrygold and Baileys, are to be hit by a new 25 per cent tax by the United States as part of $7.5 billion worth of tariffs on European exports.
Yet there is still plenty of cash washing around. A new report by Wealth-X this week showed the Republic has the fifth largest number of “ultra-wealthy” individuals – anyone with a net worth of $30 million or more – per capita in the world.
It showed there are 421 super-rich individuals per million adults in the State, placing the Republic behind only Hong Kong, Switzerland, Luxembourg and Singapore.
On the corporate front, BioMarin, a drug group that focuses on treating patients with rare genetic disorders, opened a new Dublin headquarters for the EMEA region, doubling its headcount to 500.
Elsewhere, Paddy Power owner Flutter Entertainment’s plans to create a £4 billion (€4.5bn) gambling giant with the parent of Poker Stars and Sky Bet to seek to grow in all key markets, Europe, the US and Australia.
In the North, closure-threatened Belfast shipyard Harland and Wolff was saved when it was bought for £6 million by London AIM-listed group InfraStrata, which promised to re-employ previous staff and boost its workforce by several hundred.
Mixed fortunes in energy sector
After Taoiseach Leo Varadkar’s promise to the UN last week that the Republic would ban oil exploration, Minister for Climate Action Richard Bruton announced a review of the our fossil fuel needs.
The Government wants us to generate 70 per cent of electricity from renewable sources such as wind and solar power by 2030. However, as Bruton said, we will still need fossil fuel during periods when “the wind isn’t blowing or the sun isn’t shining”.
Staying with energy, Providence Resources is to seek a new partner to develop its Barryroe oil fields following the latest failure of Chinese backer Apec to loan it $9 million. The company has also announced plans to slash costs and lay off staff.
There was better news for former Tullow Oil senior executives Aidan Heavey and Tom Hickey, who secured $1 billion (€920m) in backing from US investment giant Carlyle for a new oil and gas venture in west Africa called Boru Energy.
The company will target “primarily non-operated interests” in energy assets in the region, taking advantage of a major divestment drive by big energy companies looking to shift away from fossil fuels.