Inside the world of business
Initiative for young singletons could help save the economy
WHILE THERE are groups in society for whom financial strain is a daily and often unbearable burden, it is also the case that there are beds all over the State under which cash is being regularly placed.
A key issue for the Government is working out how to persuade the owners of these valuable funds to part with them in a way that will drive revenues into tax coffers. First though, the owners of the beds need to be identified.
Enter Ibec, which has conducted a “drilling-down” exercise into official savings ratio data. According to the Central Statistics Office, the gross household savings ratio reached 12.9 per cent at the start of the year, having climbed from the low single digits that became the norm during the good old boom times.
Ibec reckons debt repayment accounts for about half of this. The remainder is what economists like to describe as “precautionary”. In other words, it’s just-in-case money being saved by consumers worried about which fresh financial hell might lie around the next corner.
Ibec has gone further, identifying three distinct savings behaviours among the population. It concludes, unsurprisingly, that it is 35-50 year olds who are under most financial strain and carry most debt, thus leaving them unable to save much. Those above 50 meanwhile, have been “cautious all their lives” and continue to save along these lines.
The most interesting cohort is the remaining under-35 group, which Ibec says is posting the largest increase in savings and which the association sees as an important target market in helping the economy to “get back to normal”.
One issue here is undoubtedly poor access to mortgage credit, particularly for single people. They may have savings mounting up, but without a homeloan, there can be no purchase. Lack of confidence in the economic outlook is also clearly of significance, making it crucial for Government to listen to one of Ibec’s other pre-budget recommendations: better communication with its citizens. If Enda Kenny could manage an initiative that spoke to the under-35s on both counts, he might just be on to a winner.
Laws still onto a loser
TWO EVENTS this week illustrated just how far removed from reality are the Republic’s gambling laws.
On Thursday, regulators in the channel island of Alderney finally revoked Full Tilt Poker’s licences, throwing a question mark over the future of up to 600 jobs at the group’s Irish subsidiaries.
On the same day, it emerged that Paddy Power has applied for a licence to provide online betting in Nevada, the US state that is home to Las Vegas. The company is doing this in case an imminent change in the laws there opens new opportunities.
The Alderney Gambling Control Commission withdrew Full Tilt’s licences because, it says, the group misled it about its finances.
The Dublin subsidiaries were named, but not directly involved in the process that led to the licences being revoked. They are also named as defendants in a claim by US attorney Preet Bharara that the group used players’ funds to pay directors $440 million.
Paddy Power’s licence application to the State of Nevada represents an entirely different side of the same sector. Nevada has recognised that online gambling is a growing business and represents an opportunity to raise revenue.
Thanks to archaic legislation, the Republic has no regime at all. One consequence is that two Irish Full Tilt subsidiaries feature in a serious complaint before a court in the US, one of our most important trade partners.
The other consequence is that the Republic is missing out on an opportunity.
Two years ago, a conference on online gaming in Dublin heard that up to 10,000 new jobs could be created in the sector here if we had a proper, transparent, system of regulation.
The Republic began looking at this in 2005 as part of move to reform its laws. Six years and three ministers for justice later, we have a press release telling us a Bill is on the way next year. In the meantime, the opportunities to cash in on a growing industry will slip away.
Nama V McKillen part II
THE NATIONAL Asset Management Agency must be taking a certain glee in selling the €800 million debt on the Maybourne Hotel Group in London to the Barclay brothers.
The move puts David and Frederick Barclay, owners of the Daily Telegraphand The Ritz hotel, in a strong position to wrestle full ownership of the hotels from the group's 36 per cent shareholder, businessman Paddy McKillen.
McKillen gave Nama a bloody nose in his legal battle against the agency which he won in the Supreme Court.
The agency’s sale of the debt was completed without McKillen’s knowledge and the Belfast-born businessman was said to be “concerned” about the transaction.
The Barclays have built up their interest in the group, which owns the five-star Claridge’s, The Connaught and The Berkeley hotels in London, over the past year. They bought a company called Misland, through which the family of Manchester businessman Peter Green, owned a stake of 25 per cent.
McKillen may seek to challenge Nama’s sale and last night his spokeswoman disputed that the brothers now owned a majority stake of 64 per cent, as had been widely reported. McKillen could yet become embroiled in another battle.
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