Brexit tug-of-war gathers steam with six months to go

Business Week: also in the news was Ryanair woes; corporates; and economic indicators

British prime minister Theresa May  with former Brexit secretary David Davis and former foreign secretary (and would-be challenger) Boris Johnson. Photograph: Peter Nicholls/AFP/Getty Images

British prime minister Theresa May with former Brexit secretary David Davis and former foreign secretary (and would-be challenger) Boris Johnson. Photograph: Peter Nicholls/AFP/Getty Images

 

There are just over six months to go until the United Kingdom leaves the European Union, come hell or high water. All sides – and there are more than two – have been setting out their stalls and turning up the heat as they race to secure the outcomes most favourable to them.

Former foreign secretary and would-be Theresa May challenger Boris Johnson was typically measured as he compared his prime minister’s Chequers proposal to a “suicide vest” around the British constitution.

“We have wrapped a suicide vest around the British constitution – and handed the detonator to [EU chief negotiator] Michel Barnier, ” he said, before later adding that May’s Chequers proposal would be worse than simply remaining in the bloc.

Tánaiste Simon Coveney – the Republic’s point man on Brexit – described the suicide vest remarks as “ill-judged” and “extraordinary”.

Later in the week, UK Brexit secretary Dominic Raab threatened that his government would not pay its £39 billion (€44 billion) “divorce bill” to Brussels if there was no overall deal on its departure.

Raab, who added there would be “no deal without the whole deal”, said it could happen, but only if “our EU friends” match the “ambition and pragmatism” of the British. You can imagine what Coveney and Barnier must have thought when they heard that.

Raab also said the UK was “stepping up” its preparations for leaving the EU without a deal, something pretty much everyone concedes would be a disaster. Even the chairwoman of the Vote Leave campaign, Gisela Stuart, said it was in nobody’s interests.

Doomsday scenario

And then, on Thursday, came Bank of England governor Mark Carney’s doomsday scenario – outlining for vacillating UK cabinet ministers a chilling scenario where the economy implodes and property prices crash by a third.

Barnier, for his part, said a Brexit deal was possible “within six or eight weeks” if negotiators were realistic in their demands, but, on recent form at least, there are one too many ifs in that sentence.

His boss, European Commission president Jean Claude Juncker, said the bloc would “always show loyalty and solidarity” with the Republic on the Border, and that he would be “very outspoken” should Britain renege on its duties under the Belfast Agreement.

Juncker, who was delivering his annual state-of-the-union address, was less sympathetic to Irish interests when he suggested that the EU should scrap national vetoes on tax, and move to a system of majority voting.

Brussels is pushing for more co-ordination regarding tax in Europe and an EU-wide digital tax on big tech companies such as Apple and Google, which is opposed by the Irish Government on the grounds that it would choke multinational investment here.

***

Ryanair without Michael O’Leary seems scarcely imaginable – but shareholders were this week urged to bring about just that scenario.

It’s been a challenging year for the budget airline, and investor adviser Pirc has called for O’Leary’s head at the company’s annual general meeting (agm) next week, citing industrial unrest and flight cancellations.

Perhaps that call – and similar advice regarding other board members from rival shareholder advisers – has something to do with Ryanair’s unusual step of barring the media from its agm.

The airline said it would not invite or admit press to the meeting to allow shareholders to “discuss all matters freely with the board” without having those discussions distorted for – get this – public relations purposes. This from a company that, more than any other, has assiduously used the media as a marketing tool. Imagine.

The airline’s woes go on too. It is facing a one-day walkout by cabin crew in Belgium, Italy, the Netherlands, Portugal and Spain on September 28th as unions step up pressure on the airline to accept local contracts.

Up, up and... down. Ryanair’s woes continue. Photograph: Marcel Kusch/AFP/Getty Images
Up, up and... down. Ryanair’s woes continue. Photograph: Marcel Kusch/AFP/Getty Images

Ryanair isn’t the only company with problems. Malin Corporation bowed to shareholder pressure to review its executive pay plan, after it was rejected by more than half of shareholders.

Over at Cuisine de France owner Aryzta, shares jumped as much as 18 per cent after it said a group of investment banks had conditionally signed up to guarantee its planned €800 million share sale later this year as it seeks to get back on its feet. However, a Swiss activist investor is seeking to block the move.

Elsewhere, Eir is taking the contract for its call centre back in-house in a move that will bring 950 outsourced staff back into the company fold, while, separately, the State will share in the €136 million that national forestry company Coillte will earn from the sale of its stake in four wind farms to Greencoat Renewables.

***

Don’t shoot the messenger, but the Republic has been ranked in the top 10 places in the world to retire for the very first time in a new study. A separate report says Irish households are apparently wealthier than they were during the boom.

Natixis’s latest global retirement index ranked the State seventh, a significant improvement on recent years, as it recorded the largest jump in both rankings and score of all 43 countries covered.

Meanwhile, the Central Bank’s latest quarterly financial accounts showed the net worth of Irish households rose to a record €732 billion in the first quarter of 2018, equating to €150,768 per person, eclipsing the boomtime high of €719 billion. The figures are calculated by adding the total value of the housing stock and financial assets, such as savings and investments, and subtracting debt owed or liabilities.

Cost of building

More figures – this time from the Central Statistics Office – showed the Irish economy grew by 2.5 per cent in the second quarter of this year, five times the euro zone average, on the back of another strong pick-up in exports.

But tell all that to anyone trying to find a home. The cost of building one has risen 7.5 per cent to as much as €161,000 in the past year, according to new figures from leading quantity surveyors group Linesight.

The growth in property price continued to moderate in July, as prices across the State rose by 10.4 per cent on an annual basis. That was down from 11.9 per cent in the year to June.

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