Cantillon

Inside the world of business

Optimistic Ibec cannot see clouds for the silver linings

HATS OFF to Ibec for putting the best foot forward when it comes to the economy. The employers’ group forecasts that the economy (as measured by gross domestic product) will grow by 1.5 per cent this year. The figure is double the Government’s prediction and well ahead of the Central Bank’s 0.9 per cent claim.

Such optimism is based on what it believes is better than expected economic data which has been obscured by the euro zone crisis. Amongst other factors they home in on the census which found that the population was 100,000 greater than forecast and upward revisions by the CSO of their numbers for 2010.

As a result the economy was €2 billion larger going into 2011 than expected, which Ibec argues makes the job of hitting the deficit to GDP ration agreed under the terms of the EU-IMF bailout that little bit easier.

The organisation also alludes to what is presumably some sort of insight gained from its members to argue that confidence is returning to business. “Firms’ investment in machinery and equipment is growing again as Irish businesses demonstrate their confidence in the outlook for the economy. The percentage of firms planning to hire new staff has also increased significantly as businesses are both tooling up and staffing up to meet the continued growth in export demand,” it points out.

Its cites its own business confidence survey which found that in the second quarter managers’ confidence in their own businesses remained broadly unchanged from the previous quarter and has now been positive for four consecutive quarters.

It is possible that something is stirring unnoticed in the bowels of the economy, but in the current climate of overbearing pessimism it is easier to dismiss Ibec’s comparative optimism as a drowning man grasping at straws.

Indeed the organisation has a pretty powerful incentive to talk things up given the extent to which its constituents’ fortunes are tied to consumer demand. But by the same token, it will do itself no favours if it predictions are not aligned to what its members are experiencing on the ground every day.

Bord na Móna turns from bogs to basins

BORD NA Móna’s chief executive, Gabriel D’Arcy, made no secret yesterday of its ambition to become the Republic’s first water utility. The company, he says, already has the expertise required to run such a business, it is a utility with divisions already involved in water treatment and water management.

It also has access to something that you very obviously need if you want to be a water utility: water. A year ago, it revealed that it has been working on a €500 million plan that involves bringing water from the Shannon basin, from a point to the north of Lough Derg, to a reservoir in Garryhinch, west of Portarlington, from where it will be pumped eastwards.

The water will supply up to nine counties in the east and midlands, including Dublin, Kildare, Meath, Westmeath and Wicklow. Water charges, which now seem inevitable, will ultimately pay for the development.

The idea is based on the fact that the Shannon basin has too much water, while the eastern counties have too little. There are political issues here too, but D’Arcy is selling the plan on the basis that it is an opportunity for the midlands.

Bord na Móna was born from the realisation that something as mundane as bogs could be valuable. Now it looks like a similar realisation, that something as mundane as water is valuable, could hasten its transformation from peat harvester to full-scale utility.

TODAY

Allied Irish Banks and the finance workers’ trade union, the IBOA, are to appear before the Labour Relations Commission.

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