Despair as last-minute hopes for Brexit deal seem to crumble

Business Week: also in news were jobs, foreign direct investment and hatred of banks

European Council president Donald Tusk  with Britain’s prime minister Theresa May: backstop agreement is major stumbling block.

European Council president Donald Tusk with Britain’s prime minister Theresa May: backstop agreement is major stumbling block.

 

For a moment last weekend, hearts were suddenly aflutter that – out of nowhere – a deal to secure the United Kingdom’s orderly exit from the European Union was in the offing.

UK Brexit secretary Dominic Raab was said to be “dashing” to Brussels for face-to-face talks with the EU’s chief negotiator Michel Barnier, while EU ambassadors were summoned to a meeting that one report suggested was to get early sight of a deal.

But it was just a mirage. Raab was not there to give a final political impulse to a deal that was close to signing, but to say that it would not happen. London could not stomach the compromises necessary for the Irish backstop agreement, and talks were abandoned.

There was shock and dismay in Brussels at the setback, just days ahead of a “moment of truth” EU leaders’ summit. Instead, it was Groundhog Day in Luxembourg as the British continued to make contradictory promises they simply cannot keep.

At the centre of the talks is the so-called backstop, the legally enforceable agreement to guarantee there will no hard border on the island of Ireland, no matter what emerges from later trade talks.

As negotiators had failed to make sufficient progress in the talks, plans to call a special November summit were shelved. Taoiseach Leo Varadkar sounded like he was at the end of his tether when asked about the possibility of the talks extending into January.

“I don’t know,” he said. “I really hope we can have it done in November. If we don’t, then we can do it in December, and if that doesn’t happen, then there’s other events after that. I just don’t know.”

Former Conservative prime minister John Major meanwhile aimed a blistering attack on elements within the Tories seeking to force the hardest possible Brexit. He called it “a colossal misjudgment” that could lead to the break-up of the UK.

Over a third of European asset managers are now preparing for a no-deal Brexit, but nearly half also say that they are struggling to be ready on time for the UK’s exit, which is now less than 200 days away.

On the bright side, Hudson River Trading, one of Europe’s biggest equity traders, picked Dublin to be its base in the bloc once the UK leaves in March, but, in truth, it will only involve a handful of jobs.

FDI reversal

The effects of US president Donald Trump’s America First policy were felt on Irish shores during the first half of 2018 as new figures this week showed a sharp reversal in foreign direct investment here.

The statistics, from the United Nations Conference on Trade and Development, will have made sobering reading for Minister for Finance Paschal Donohoe and IDA Ireland.

A net total of $6 billion flowed into the State in the first half of 2017, compared with a negative $73 billion for the same six months of this year as many US companies moved to repatriate accumulated foreign earnings from their affiliates abroad.

On a related note, Western Digital, a Silicon Valley data storage giant, is challenging a $516 million (€449 million) tax bill from US authorities over its alleged use of Irish subsidiaries in its global tax planning. It has no substantive commercial operations here.

There was a raft of job announcements this week amounting to more than 1,500 new roles.

Eir said it will create 750 jobs at regional hubs in Sligo, Cork and Limerick as it brings customer services operations back inhouse. Also in Cork, outsourcing firm Voxpro is to create 400 jobs.

Elsewhere, Pharma giant MSD is to create 170 new jobs and build a second manufacturing facility at its existing site in Co Carlow, while, in the North, engineering group Camlin plans to create nearly 300 jobs as part of a new £28 million expansion.

Banks disliked

Moving on is hard to do, as the old saying goes, but AIB chairman Richard Pym has called on Irish people to bury the hatchet and learn to trust again.

Pym, speaking at the Banking and Payments Federation Ireland (BPFI) annual conference this week, said he was “fully aware of the damage and harm and hatred that’s felt towards the banks” by Irish people. “But you have to move on at some stage,” he said.

Pym said pay restrictions for bailed-out banks have turned AIB into a “training ground” for bankers who then move to higher-paid roles with competitors. The State was “raising barriers” for banks while encouraging foreign competitors, he continued.

Separately, the bank’s chief executive, Bernard Byrne, said the group had lost a “mid-teens” percentage of almost 200 of its most senior managers since returning to the main Dublin and London stock markets in June last year.

He told The Irish Times “Inside Business” podcast that the turnover of senior staff is higher than normal and “accelerating” as overseas financial firms prepare to move operations to Dublin as a result of Brexit.

Staying with financial services, Bank of Ireland mortgages will be available through brokers for the first time in five years from November, while Finance Ireland, the State’s largest non-bank retail lender, is to enter the mortgage market.

Meanwhile, results from Goldman Sachs’s three main Irish vulture funds showed they collected more than €465 million from local borrowers last year on distressed property loans the Wall Street giant purchased from Irish banks during the recession.

Elsewhere, it emerged that Deutsche Bank has agreed to buy a €300 million portfolio of property loans in and around Cork city – dubbed Project Lee – from Nama. They were previously associated with the late Cork developer Owen O’Callaghan.

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