Business Week: Britain sets a date for the long goodbye

After nine months of ifs and buts since the United Kingdom voted to leave the European Union, prime minister Theresa May this week finally named a date for the triggering of the Lisbon Treaty’s article 50, and the start of Britain’s long goodbye.

On March 29th – next Wednesday – May will formally notify European Council president Donald Tusk of the UK's intention to leave. Then, a two-year period of divorce talks can begin, with Brexit, for now at least, scheduled to take place in March 2019.

It didn’t take long for the EU to start flexing its muscles, insisting that the first Brexit summit of its remaining 27 members will not take place until April 29th – a full month after May triggers article 50.

Tusk said the delay was to allow the EU to agree on the guidelines and broad outline of the principles that will guide them through the negotiations. May, who is expected to give some indication on Wednesday as to the UK’s hand, was talking up the event.

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Wednesday, she told her Cabinet, would be a “historic event and will precipitate a shift in our role in the world, and see Britain begin a bold new chapter as a prosperous, open and global nation”.

No ‘race to the bottom’

Away from the Houses of Parliament, the scramble for London’s spoils continues. In Dublin, the Central Bank was out to warn any institutions planning to come to the Republic that they are not in for an easy time of it in terms of regulation.

Sharon Donnery, the bank's deputy governor, said her office had received many enquiries from UK-based financial firms about relocating to the Republic. She stressed however that there could be no "race to the bottom".

Her remarks coincided with an index of 15 cities compiled by relocation company Movinga that ranked Dublin top in a list of potential EU cities London-based bankers should move to after Brexit.

It found higher income tax rates were outweighed by considerations such as average high-end rent prices, language, food, luxury stores and bars.

As for UK companies, the struggle continues as EU chiefs warned airlines they would need to relocate their headquarters and sell shares to European nationals if they wanted to continue flying routes in continental Europe after Brexit.

Executives at major carriers were privately reminded that to continue to operate on routes across the continent they must have a significant base on EU territory and that a majority of their capital shares must be owned by EU investors.

Building tension

You’d have been forgiven for feeling a sense of déjà vu on Thursday as the disproportionate role being played by the construction sector in the economy was once again the subject of frantic finger pointing by observers.

The Economic and Social Research Institute (ESRI) warned of a construction boom and the associated danger of the economy overheating. With new “post crash lows” emerging every week in terms of unemployment, the think-tank is alarmed.

If, as the ESRI predicts, unemployment falls to 5.6 per cent by the end of next year – a milestone it equates with full employment – it could be taken as a sure sign of an overheated economy.

Indeed, construction of new homes reached a seven-year high in January, as developers capitalised on the Government’s Help to Buy scheme by increasing their output.

The latest figures from the Department of Housing show that, based on electricity connections, 1,244 units were completed across the country in January, up by 35 per cent year on year. On an annual basis, that means 15,256 units were completed in the year to January, the highest level since 2010.

Despite all that, we still don’t have enough houses. The ESRI said it expected housing completions to rise to 18,500 this year, still below the 30,000 needed to meet demand.

Separately, it emerged that regulations requiring developers to set aside 10 per cent of new homes for use as social housing delivered just 64 new dwellings in 2015, compounding the plight of those in need of a house.

The Nevin Economic Research Institute said the time had come for the establishment of a new semi-state housing company to supply the market with more affordable rental accommodation.

Despite the warnings, the ESRI upgraded growth forecasts for the Republic with gross domestic product expected to expand by 3.8 per cent this year and by 3.6 per cent in 2018.

Montrose under siege

It was a sobering week for RTÉ as phrases like "fighting for survival" were uttered by director general Dee Forbes in the context of hundreds of job losses and a sell-off of land at the national broadcaster's Montrose headquarters.

Forbes didn’t pull any punches. She said the exact number of job losses was not yet known, but was likely to be about 250, or 10 per cent of the station’s staff.

“The case we’re in now is critical,” she said. “We’re fighting for survival as an organisation. What I have to do, along with the team here, is ensure that we do survive. We have to make choices.”

Those choices will involve significant restructuring at RTÉ, which Forbes said has lost €100 million in revenue since 2008. New content divisions are to replace existing television, radio and digital departments as the broadcaster fights for its life.

One way it intends to bring in some much needed cash is the sale of part of its Donnybrook grounds in Dublin 4. Offers of over €75 million for the 8.64 acre plot are being invited. The land is expected to be used for – you guessed it – the development of more houses and apartments.

The other big media news of the week was at Independent News & Media (INM), where it emerged that chief executive Robert Pitt had made a protected disclosure under whistleblower legislation about the company.

The disclosure related to the circumstances surrounding a proposed bid by the company for radio station Newstalk, which is owned by INM’s largest shareholder Denis O’Brien.

In November, there was a spat between Pitt and INM chairman Leslie Buckley, who is an associate of O'Brien's, after Pitt commissioned a valuation that was much lower than the price sought by Communicorp, the company that owns Newstalk.

Following Pitt’s disclosure, senior counsel and a corporate governance expert were deployed to carry out an independent review of the bid for the company’s board, while the Office of the Director of Corporate Enforcement, the State’s corporate watchdog, has requested documents from the company concerning what happened.

Separate from all that, INM posted results which showed pre-tax profits increased by almost 12 per cent to €41.8 million in 2016. Profits increased largely as a result of lower costs, with the company’s pre-distribution operating expenses dropping 9 per cent.

Ulster Bank retrenches

There was more bad news for the banks as Ulster Bank unveiled plans to close 22 of its branches in the Republic by the end of September as part of a major restructuring of the business that will result in 220 redundancies.

Separately, the Central Bank said €78 million had been paid by lenders to 2,600 mortgage account holders in redress and compensation for being denied a tracker rate at some point over the past decade.