Deluded Brexiteers a cause for alarm in Dublin
Business Week: also in the news were house prices, the economy, Ryanair and INM
Hardline Brexiteers Nigel Farage and Jacob Rees-Mogg: getting to grips with the details of exit. Photograph: Dan Kitwood
Patrick Coveney, CEO of Greencore: warned of possible food shortages after Brexit. Photograph: Dara Mac Dónaill
Michael Stanley of Cairn: “not a chance” new house completions will hit levels that meet demand by 2021. Photograph: Cyril Byrne
You can just imagine the scoffs from hardline Brexiteers such as Jacob Rees-Mogg and Boris Johnson when Greencore chief Patrick Coveney – brother to Tánaiste Simon Coveney – warned of possible food shortages in the UK after it leaves the EU.
Such has been the level of delusion over the potential consequences of Brexit in such circles – not to mention indignation at Dublin’s straight-talking, no-nonsense rhetoric on the matter – it was likely greeted with knowing looks and dismissed with: “Ah, sure he would say that.”
The reality though is that this week’s warning from Coveney was not the first of its kind and it won’t be the last. He said Brexit would be “catastrophic” for many businesses if it were “to unfold as badly as it could”.
Britain’s Brexit secretary Dominic Raab is another who would seem prone to unwarranted optimism after claiming that a deal is “within our grasp” despite EU chief negotiator Michel Barnier branding Theresa May’s Chequers plan for customs as “unworkable”.
In Dublin, it’s a case of “hope for the best but plan for the worst”. The Revenue Commissioners are preparing for full customs checks involving officials from a number of Government departments in case no deal is reached on Brexit.
Reports this week from the Irish Fiscal Advisory Council (Ifac), the Central Bank and the Department of Finance all called for prudence in next month’s budget, with Brexit and US president Donald Trump’s protectionist trade policies highlighted as key risks.
fac, the State’s budgetary watchdog, said an “adverse shock” to the economy was now “inevitable”. It warned that, although the public finances have stabilised, improvements in the underlying budgetary position had stalled since 2015.
We are still running a budgetary deficit with the State spending more than it raises, but Ifac advised an “earlier-than-planned move” to running a small budgetary surplus, with any extra cash put towards “buffers” to cushion the economy from shocks.
The Department of Finance also warned the Government that continuing to run a budget deficit despite strong economic growth “increases the vulnerability” of the public finances to shocks.
It also warned that public debt per head of population, at €42,000, is third-highest among the world’s advanced economies and that €1 out of every €13 spent by the Government this year will go on servicing it.
The Central Bank, in its report, said recent surges in corporation tax could be just temporary. Indeed, exchequer figures this week showed tax receipts for the first eight months of the year were €100 million below target.
Famous ‘soft landing’
There were shudders this week as ratings agency S&P said Irish house prices – along with housing markets elsewhere in Europe – were heading for a “soft landing”.
The phrase was famously used more than a decade ago as politicians, economists and the Central Bank asserted that growth in the housing market would ease off rather than crash – as, of course, happened.
This time, S&P has said price growth in the Republic will ease – but won’t turn negative – as supply catches up with demand. It is forecasting price growth of 9.5 per cent this year, easing to 8 per cent in 2019, 7 per cent in 2020, and 6 per cent in 2021.
A separate analysis from estate agency Sherry FitzGerald found that, while the number of homes for sale here is beginning to creep up, it is still at just half of levels recorded eight years ago.
Cairn Homes chief executive Michael Stanley meanwhile said there was “not a chance” of new house completions in Ireland bouncing to levels that meet demand by 2021. “We’re hoping by 2021 we’ll be doing 1,500 units,” he said. “If everybody else in the sector scales at the same pace as us, we’ll have got to 30,000. But I can’t see that happening.”
There are other moves afoot in the homebuilding sector. US private equity giant Lone Star has hired stockbroking firm Davy to help with plans for an initial public offering (IPO) of Irish builder Durkan Residential that could raise €300 million.
Elsewhere, recently floated builder Glenveagh Properties has begun building on 12 sites and expects work to get under way on a total of 800 new homes this year, while offsite construction specialist McAvoy Group is to enter the Irish residential property market.
Meanwhile, Cork property developer Michael O’Flynn urged the Government to introduce an emergency measure that would involve designating thousands of acres of unzoned land in urban areas for house building.
INM and Ryanair
Two of the Republic’s biggest companies had a contrasting week as the High Court appointed inspectors to Independent News and Media (INM), while the dispute between Ryanair and its Irish pilots was finally resolved.
The High Court ruled that former INM chairman Leslie Buckley, who was a nominee of shareholder Denis O’Brien, may be “guilty of misconduct” at the media giant. High Court inspectors are now going in to investigate potentially “unlawful” conduct.
This includes concerns by the State watchdog that INM may have been run for the benefit of O’Brien over others when Buckley was chairman. It includes concerns journalists’ emails were improperly accessed for data, including on people who crossed swords with O’Brien in the past.
Meanwhile, about 100 of Ryanair’s 350 Irish-based pilots voted unanimously to accept a deal brokered between the Irish Airline Pilots’ Association – part of trade union Fórsa – and Ryanair during talks led by independent mediator Kieran Mulvey.
The end to the saga may pave the way for Ryanair to reverse a decision to move aircraft from Dublin this winter with the possible loss or transfer of 300 jobs. For now though, the threat of any further strikes at the airline’s Irish operations has lifted.
Finally, Dublin Airport is to spend €900 million by 2023 on an expansion that will allow it to handle up to 40 million passengers a year. That’s in addition to the estimated €320 million the airport’s owner, DAA, is to invest in a new runway.