Dublin could yet be left to yearn for days of May’s premiership
Business Week: Also in the news was Government spending; tourism; and housing
Boris Johnson during the launch of his campaign to become leader of the Conservative Party and prime minister at the Sky Loft, Millbank Tower, Westminster. Photograph: Stefan Rousseau/PA Wire
The notorious criminal Larry Dunne, credited with flooding the streets of Dublin with heroin in the 1970s, famously remarked to gardaí after his conviction on drugs offences: “If you think we were bad, just wait until you see what’s coming after us.”
UK prime minister Theresa May could well adopt a similar sentiment when she says her goodbyes to Taoiseach Leo Varadkar as she prepares to leave Downing Street in the coming weeks.
For all the frustration and disquiet surrounding May’s handling of Brexit, the now overwhelming favourite to succeed her is the UK’s bungling former foreign secretary Boris Johnson.
Launching his leadership campaign this week, a barefaced Johnson shamelessly placed the fate of the Conservatives ahead of the state he seeks to govern, arguing that the party must lead the UK out of the bloc on October 31st or risk electoral annihilation.
Pledging to leave without a deal unless better terms can be wrestled from the EU, Johnson coined a mantra to rival May’s now infamous “Brexit means Brexit” slogan. “Delay means defeat,” he said. “Kick the can again and we kick the bucket.”
Indeed, MPs later rejected a Labour motion aimed at preventing the next prime minister from taking Britain out of the EU without a deal against the will of parliament.
Johnson’s bluster was exposed further with the publication of a confidential cabinet note warning that the country is still as much as eight months away from being prepared for the disruption of a disorderly exit.
Meanwhile, a study this week argued that the potential disruption to trade in services from Brexit could pose a far greater threat to the UK and EU economies than restrictions around the movement of goods.
The research from the Dublin-based Institute for International and European Affairs said services, many of which are non-financial, make up nearly three-quarters of the UK’s economic output and about 70 per cent of the EU’s economic activity.
The State’s budgetary watchdog was also concerned about the escalated threat of a no-deal Brexit, arguing that if it were to cause our debt ratio to rise, it could directly affect how we borrow from financial markets.
“We haven’t given ourselves sufficient room to absorb the potentially very large shock that a hard Brexit could present to the Irish economy and to the public finances,” said Irish Fiscal Advisory Council chairman Séamus Coffey.
Separately, a report by two lawyers specialising in EU and international customs law, said businesses in Northern Ireland would face massive difficulties in the event of a no-deal Brexit with the burden falling most heavily on small and medium enterprises.
Government spending under fire
The Government got it in the neck from just about all sides this week in relation to its handling of the State’s finances.
John McCarthy, the State’s chief economist, said the economy was on a knife-edge, between “overheating” and a major Brexit-related downturn. “At the moment we’re on the verge of overheating,” he said, adding this could “rapidly turn to underheating”.
Minister for Finance Paschal Donohoe was bullish though, and said the risk of the economy overheating will be factored into budget calculations as the Government finalises its tax and spending package before the election.
Earlier in the week, the State’s budgetary watchdog branded the Government’s medium-term projections for the public finances as “not credible”.
“They imply an implausible slowdown in spending growth based on technical assumptions, which do not reflect either likely future policies or the future cost of meeting existing commitments,” the Irish Fiscal Advisory Council (IFAC) said.
IFAC also called for a “prudence account” to be established into which corporation tax funds be funnelled. It further accused the Government of breaching spending rules last year, leaving the State running the risk “of repeating the mistakes of the past”.
Meanwhile, new figures from the Revenue Commissioners showed that a Government clampdown on international funds that were avoiding paying tax on their Irish property portfolios led to a sharp decrease in corporation tax receipts.
The figures show that in 2016, so-called section 110 companies contributed some €201 million in corporation taxes to the exchequer. By 2018, however, this had fallen to just €93 million.
There were concerns also from a tourism perspective after figures showed revenue from visitors dropped in the first three months of 2019 by 4 per cent, which was the first fall for years. Tourism chiefs blamed the reduction on global economic uncertainty.
Staying with travel, Dublin Airport is halting work on a €2 billion expansion following regulators’ proposals to cut the gateway’s passenger charges.
The freeze has already hit work on the south apron, where DAA is spending €500 million, the lion’s share of it on extra aircraft stands close to terminal two to accommodate Aer Lingus’ growing transatlantic business.
Elsewhere, the Government is to give €14 million in taxpayers’ money to regional airports this year, including €5 million to one with no scheduled services. Minister for Transport Shane Ross said it would allocate €8.85 million to Donegal, Kerry and Knock.
Construction back in the boomtime
What a difference a decade makes. The combined turnover for Ireland’s top 50 construction contractors increased by 25 per cent to €8.39 billion last year, according to the latest industry ranking.
Figures in the Construction Industry Federation Top 50 Contractors list show that John Sisk & Son retained its position as the largest contractor, with revenues of just under €1.2 billion, up from €950 million in 2017.
Indeed, there were more plans announced this week for hundreds of new homes. First, developer Paddy McKillen jnr’s Oakmount got the green light to proceed with a plan to deliver 291 apartments at Temple Hill in Blackrock in south Dublin.
Elsewhere, Ires Reit, the State’s largest residential landlord, raised €134.2 million in a share placing on Thursday as it lined up funding to acquire a portfolio of 815 apartments, mainly in Dublin, where tenants are paying almost €1,500 rent a month.