Business Week: Mortgages, emissions, and jobs news

European Commission brings new Government back down to earth

 Prof Philip Lane, Governor of the Central Bank of Ireland. Photograph:  Jason Clarke.

Prof Philip Lane, Governor of the Central Bank of Ireland. Photograph: Jason Clarke.


After all the castles in the air promised during the election campaign, the Government was brought back down to earth this week as the European Commission delivered its first report since the Fine Gael-led administration took office.

The Government was warned it must broaden the tax base to act as “a buffer” against economic shocks, with the commission noting that recent tax measures have focused on tax cuts and reliefs.

EU officials are known to be concerned about changes to USC and the suspension of water charges. The report also noted the trend away from investment in public services.

“Seven years of sharply reduced government investment have had a negative impact on the quality and adequacy of infrastructure and the government support for intangible investments,” it said.

If the last government had to concern itself with Brussels looking over its shoulder and dictating policy – this Government’s puppet masters lie on the Opposition benches.

Minister for Finance Michael Noonan was bristling as the Government opted to save face by not challenging a Fianna Fáil Private Members’ Bill that would give the Central Bank the power to regulate mortgage interest rates.

He said the Bill was flawed and possibly unconstitutional, but as Labour and Sinn Féin weighed in behind it, the Government could not carry the day. The Bill has passed second stage in the Dáil and now goes to committee stage for further debate.

Noonan is not alone in his reservations. Central Bank of Ireland governor Philip Lane has warned of implications for competition. Giving the Central Bank power to control variable interest rates could hinder the entry of new players to the Irish mortgage market, he said, but he insisted the bank would comply with “not just to the letter but to the spirit of any law” introduced.

There was better news from the National Treasury Management Agency, which topped up the amount raised in a bond auction last week.

The State’s debt management agency quietly sold an additional €101 million of six-year bonds late last week. It also joined a growing chorus of opinion that a British exit from the EU could benefit the Republic, even if the overall impact would be negative.

“Following UK exit, some activity in London may be forced to move within the EU in order to properly service the single market,” the NTMA said. “Dublin would be an obvious choice for relocation [of financial services].” It pointed to estimates that the Republic could attract some €6 billion of foreign direct investment should the UK leave the EU.

There were similar soundings from Ryanair chief Michael O’Leary who warned British voters foreign direct investment would be lost to the Republic if they chose to leave.

Mr O’Leary was speaking as he opened Ryanair’s new European training centre in London Stansted Airport on Monday. “Let me put it simply, if Britain isn’t a member of the EU, these investments – these jobs – will be going to other countries,” he said.

If the threat of lost jobs and investment wasn’t enough, he put the boot in with claims that consumers could kiss goodbye to the days of cheap air travel.

“If Britain leaves the single market, Britain may be forced out of the Open Skies regime and air fares and the cost of holidays will rise. That’s not speculation, that’s a certainty.”

Indeed. com, the international jobs site whose European headquarters are in Dublin remarked that the Republic could attract more qualified candidates for jobs if the British voted to leave.

“It’s likely that a vote for Brexit would bolster Ireland’s attractiveness to talented workers looking for high-quality roles within the European Union, ” said Mariano Mamertino, an economist with the firm.

The Irish Congress of Trade Unions was unequivocal : “No part of the island will remain untouched.” The group said it would have “significant implications” for members’ living standards, for employment and for workers’ rights in both the Republic and the North, and warned of job losses in the community sector funded by the EU, with the North to receive €3 billion in EU funding up to 2020.

Another area of concern is security. Credit rating agency Fitch has warned a British exit could increase political risk around Europe. In addition, it said, “Brexit would represent a symbolic moving apart of the UK and Ireland that could weaken confidence in the peace process in Northern Ireland”.Fitch ranked the Republic as among the EU countries whose banking sectors had “sizeable” links to the UK banking system. It also noted concerns that a Brexit could create a precedent for other states leaving the EU. “It could boost anti-EU or other populist political parties, and make EU leaders more reluctant to implement unpopular policies with long-term economic benefits.”

The emissions scandal that has rocked the motor industry appears to be snowballing. What started out as a seemingly isolated incidence of a company trying to cheat the system has led to further revelations.

Irish MEP Deirdre Clune this week called on Volkswagen Group Ireland to begin compensating the 110,000 Irish customers affected by the car giant’s recent emissions scam.

Separately, South Korea accused Nissan Motor Co of manipulating emissions on its Qashqai SUV, while Germany is to open an investigation into Opel after claims the company uses software in two diesel models for the same purpose.

The South Korean government said Nissan used a device that helps a vehicle’s emissions management system turn off during regular driving conditions. Nissan has denied any wrongdoing but Seoul has pledged to fine the firm and sue the head of its Korean operations.

German magazine Der Spiegel said tests it carried out on the Opel Astra and Zafira models showed they emitted 11 times the legal limit of noxious nitrogen oxide. After “intense” talks in Berlin, officials said Opel chief executive Karl-Thomas Neumann was unable to debunk the test results.

Opel was also forced to recall more than 8,000 cars in the Republic for the second time over fire risk fears.

There were a number of jobs announcements . Smart Storage, a firm that specialises in under-stair storage solutions, is to create 60 jobs at its Irish operation in Wicklow.

Online furnishings retailer Wayfair is to create 160 jobs in Galway as part of a major expansion.

However, the pharma sector was hit as Swiss group Roche confirmed the closure of its Clarecastle plant in Co Clare with the loss of 240 jobs and a provisional liquidator was appointed to Clonmel-based Suir Pharma, putting 134 jobs at risk.

Goodbody Stockbrokers is to lay off about 20 staff, according to sources, marking its biggest jobs cut since it was acquired five years ago by financial services firm Fexco.

Marketing and sales software firm Salesforce is to create more jobs in the Republic as part of a European expansion of 1,200 staff over the next year.

Technical and engineering firm LotusWorks is to create 100 jobs at its Sligo headquarters over the coming year, while, the Smarmore Castle Private Clinic – a new drug treatment centre in Co Louth castle – is to employ 48 people.

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