Brexit deal a chance to save face but Commons’ hurdle remains

Business Week: also in the news was tourism; energy; trade; and criticism of the budget

 Boris Johnson and Leo Varadkar in Brussels on Thursday. This week’s Brexit deal left all but a fraction of the agreement negotiated with Theresa May intact. Photograph: EPA

Boris Johnson and Leo Varadkar in Brussels on Thursday. This week’s Brexit deal left all but a fraction of the agreement negotiated with Theresa May intact. Photograph: EPA

 

It had appeared for all the world in recent weeks that diplomacy had broken down and the UK was careering dangerously towards to a crash-out Brexit that would plunge Britain and Ireland into collective chaos.

Boris Johnson, having pinned his political fate on “getting Brexit done” by October 31st, was hell-bent on avoiding the ignominy of being forced to go back to Brussels, cap in hand, seeking the extension he had insisted he could not countenance.

In the end, after a see-saw week of will they/won’t they speculation, UK negotiators and the EU agreed a deal through that great diplomatic trick of giving the appearance of a concession where, in reality, little exists.

The deal left all but a fraction of the agreement negotiated with Theresa May intact. The despised Northern Ireland backstop was replaced by a “unique solution” under which the North will continue to follow EU regulations on goods.

The North will leave the EU’s customs union with the rest of the UK but will be treated administratively as if it is remaining within it. That means there will be no customs or regulatory checks between North and South, but there will be a border in the Irish Sea.

The European Council wasted no time in agreeing unanimously to endorse the deal, but the million dollar question of whether it can command a majority in the House of Commons will not be known until today.

The deal will weaken Northern Ireland’s place in the union, betraying the DUP, the confidence and supply partners propping up Johnson’s government, while the party dealt a swift blow to the parliamentary arithmetic by vowing to resist it.

Business groups gave a cautious welcome to the deal, although former Irish customs officer Michael Doherty warned it could lead to a major increase in cross-Border smuggling which technology will be powerless to prevent.

Tourism sector buffering ahead of Brexit

The expected hit to sterling is the main reason why the tourism sector is one of the most vulnerable areas as we prepare for Brexit – but, for now at least, the sector is both thriving and can point to upcoming events that will help cushion the Brexit blow.

Dublin’s hosting of several games in next year’s Uefa Euro 2020 tournament will be worth an estimated €106 million to the economy, advisory group EY-DKM said in a report this week.

With an expected global audience of five billion for the tournament, Dublin’s participation will represent a unique opportunity to showcase the city and country to the world, the report said.

Dublin’s Aviva Stadium. Photograph: Inpho
Dublin’s Aviva Stadium. Photograph: Inpho

It is anticipated that between 76,000 and 96,000 additional tourists will visit the Republic during the two-week period, with the average stay estimated to be about six nights.

Dublin is also set to benefit from an influx of visitors for the New Year’s Festival at the turn of the year. Fáilte Ireland this week announced details of the two-day event which it said would draw about 8,000 visitors and yield €10 million for the capital’s economy.

The health of the tourism sector has been pointed to as a possible reason for a boom in transaction activity in the Republic’s hotel market, which totalled €221 million across 12 hotels in the nine months to the end of September this year.

That’s nearly three times the value of transactions for the same period last year, according to estate agent Cushman & Wakefield, which noted that trips here were up 3.5 per cent over the six months to the end of June, exceeding five million people.

Despite all that, The Irish Times reported this week that a turf war has broken out between the two State tourism agencies, Tourism Ireland and Fáilte Ireland, over the latter’s plans to place staff in the US and Europe to tempt wealthy foreigners here.

The staff would also target foreign businesses to hold conferences and other events here. It is understood that Tourism Ireland, which is mandated to market Ireland abroad, wrote to the Government complaining the plan infringes on its responsibilities.

Rap on the knuckles for the Government

Last week’s budget ruffled few feathers – or so we thought.

The Government was given another rap on the knuckles this week by the State’s budgetary watchdog, which claimed it was still using windfall revenue from corporation tax to paper over cracks in its day-to-day spending.

In its first formal response to Budget 2020, the Irish Fiscal Advisory Council said excess corporation tax receipts continue to “flatter” the Government’s budgetary position and mask repeated and unsustainable increases in health spending.

The budget aside, there were developments this week in terms of the transition to a greener economy as an Irish-German partnership moved a step closer to building a €1.5 billion wind farm off the east coast with an application for a foreshore licence.

German energy giant Innogy and Irish player Saorgus plan to build an offshore wind farm, dubbed Dublin Array, 10km off the east coast and close to the capital, capable of generating enough electricity for up to 600,000 homes.

The intention is to build the wind farm on 2,440 hectares across the Kish and Bray banks. It will include 60 to 100 turbines, which will generate the electricity, along with two cables connecting the northern and southern ends of the area with the mainland.

Staying with economic matters, the IMF this week warned that global growth is set to fall this year to its slowest rate since the financial crisis due to the US and China’s trade war, which it said has created a “precarious” economic situation.

US president Donald Trump has caused havoc all over the world with his “America First” approach to trade. A senior official from his administration this week held behind-closed-doors meetings with Government and industry figures in Dublin on the matter.

Daniel Mullaney, who is the US trade representative for Europe and the Middle East, also met with several trade bodies, the pharmaceutical sector and the business lobby group Ibec.

Elsewhere, Minister for Business Heather Humphreys led a team of more than 50 Enterprise Ireland client companies to Japan for a trade mission this week as efforts were made to capitalise on Ireland’s exposure at the Rugby World Cup.

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