Brexit cloud brings a silver lining to Dublin
Business week: Bertie Ahern tells it like it is, property prices, and Anglo Irish Bank
Dublin is in line for a boom in financial services as a result of Brexit. Photograph: iStock
Bertie Ahern, former taoiseach, giving evidence to the Exiting the European Union Committee in the House of Commons in London.
In December, house prices actually fell compared to the previous month.
Irish bankers will be delighted with the promises being made of a jobs boom in the financial sector in the wake of Brexit. As we (potentially) near the end of the beginning of this sorry saga, those gambling on a long-term career in financial services will feel justified in their career choices on the back of promises by some big international financial players with Irish bases that they have moved staff here for the long haul regardless of the Brexit decision.
“There is no return”, said Anne Finucane, Bank of America vice-chairwoman, at a finance conference in Dublin. “The bridge has been pulled up on that”, she added, talking about a possible return to the UK were it to row back from the Brexit brink.
Lest there be any doubt about the bank’s intentions, she flagged it had spent about $400 million (€353.5 million) preparing its EU hub in Dublin. And Bank of America isn’t the only institution with the intention to stay. British bank Barclays has spent up to £200 million moving operations and staff out of the UK to prepare for Brexit.
Ratings agency S&P (owned by Standard and Poor’s) also opened its EU hub in Dublin on Thursday, noting that they’re here “for the long term”. And as if they were adding insult to injury to poor old Blighty, S&P issued Brexit research saying that hiring in the Irish financial services sector “may very well accelerate because of a no-deal outcome”.
Their view is that the State could see a silver lining from a no-deal, with the labour intensive service sectors in line for a boost. Of course, even with a silver lining the agri-food sector will suffer if the UK crashes out, it added.
Also Central Bank governor Philip Lane reiterated the forecast that a disorderly Brexit could reduce the growth rate of the Irish economy by up to four percentage points. Nevertheless, he noted that the Republic’s ability to deal with the “immediate cliff edge risks of a hard Brexit” have largely been addressed.
Our ability to deal with Brexiteer rhetoric was tested this week. Former taoiseach Bertie Ahern trudged off to the UK’s parliament to give his tuppence ha’penny on the whole affair.
Asked about how the suggestion that Ireland rejoin the UK has gone down here, Ahern responded: “Well, I’ll just be kind and say, Not very well. Unfortunately we have an 800-year past of difficulties and that’s just a reality of our history”.
Whatever about past difficulties, Theresa May is most certainly the one suffering at present. The UK prime minister endured yet another humiliating defeat with MPs voting to reject her approach to Brexit on Thursday night. Luckily for her, there are only 42 more days to go.
Housing problem is not going away, you know
Predicting the movement of property prices is becoming a task for which only Mystic Meg is qualified. In December, prices actually fell compared to the previous month, although they were still up 6.5 per cent on the year. That compares to the double-digit percentage growth we saw in 2017.
It’s worth noting that in any other economy a 6.5 per cent rise wouldn’t be seen as a slowdown but such is our dysfunctional market that it is here.
And even with this “slowdown”, we still have a remarkable shortage of new homes being built to satisfy the demand of the market (18,072 built last year with demand estimated at 35,000).
The reasons for the cooling off in prices are varied. Buyers are reaching their affordability limit, but the fact that stock is in short supply would generally dictate that prices continue to rise. And they’re widely expected to continue their ascent by economists.
This week also saw the release of figures revealing the extent of non-performing loans (NPLs) in the Irish banking market. Ulster Bank, having sold a €1.4 billion portfolio of NPLs last year, still has an NPL ratio of 11.3 per cent, it said on Friday. Compare that to the euro zone where the average stands at about 3.5 per cent.
But with Dublin voted one of the top 10 most liveable European cities, the problem of housing will likely persist in the capital at the very least.
Anglo Irish is back in the news
Talk of rising house prices and images of Bertie Ahern in the media again brings back memories from the last decade when, instead of Brexit, the news was dominated by the economic collapse. And, as fate would have it, Anglo Irish Bank was back in the news this week too.
The man whose shredding of files helped collapse the trial of former Anglo chairman Seán FitzPatrick wants a public hearing to explain his errors. Kevin O’Connell, the former legal adviser to the Office of the Director of Corporate Enforcement (ODCE), has written to an Oireachtas committee to say he has new information about the investigation that wasn’t aired at trial.
O’Connell was sharply criticised by the judge who ended the trial of FitzPatrick over fears evidence was tainted. And while O’Connell accepts he messed up in the investigation, he suggests he’s not entirely to blame. He wrote that the basis upon which the Oireachtas committee is looking into the ODCE investigation is “insufficiently informed and incomplete” and its actions, he claims, are “puzzling” and “worrisome”.
Whether he’ll get his day out in the Oireachtas remains to be seen. But with ODCE director Ian Drennan due to appear before the committee on Wednesday – the first time the ODCE chief has appeared before an Oireachtas committee in his seven years in the post – we might find out sooner rather than later.