Global elite tackles ‘fractured world’ at snowy Davos

Business Week: also in the news were a new mortgage scheme, office space and the banks

The World Economic Forum this week threw up images of the global elite smoking cigars after boozy dinners – setting the world to rights.

Business leaders, celebrities, academics and politicians from all over the globe gathered in the snow-covered mountains of Davos, Switzerland, to discuss a whole range of issues facing the world.

The theme was “creating a shared future in a fractured world”, and a common denominator throughout was the ongoing tug-of-war between globalisation and isolationism.

US president Donald Trump surprised many by deciding to attend despite suggestions that this would not be his crowd. In truth, he dominated most of the proceedings before Air Force One even touched down on Thursday.

Trump's "America first" approach is anathema to the ethos of international togetherness that features so prominently in the approaches of France's Emmanuel Macron, Germany's Angela Merkel or Canada's Justin Trudeau.

As if to goad them, Trump made his first major protectionist move on the eve of his visit when he slapped tariffs on imported solar panels and washing machines, angering trade partners in the process.

European bank bosses warned Trump’s approach risked creating a more fragmented global economy, but did predict it is unlikely to trigger an all-out trade war between the US and China.

Macron told the forum that globalisation was going through a “major crisis”. In a clear reference to Trump, he said isolation was being projected as an easy solution to the problems of those “who have been forgotten and left behind”.

Merkel said it was “not the answer”. The German leader also called right-wing populism in Europe “poison” for society.

Trudeau, meanwhile, used his speech to tackle the issues of gender and corporate greed. He said it was time for a “critical discussion” about women’s’ rights, equality and the power dynamics of gender.

Cheerfully, there was also a discussion entitled "The Next Financial Crisis", at which Citigroup chief Michael Corbat said it would be "more violent", while Harvard economics professor Kenneth Rogoff warned that "we don't even have a plan A" for such an event.

Taoiseach Leo Varadkar also turned up, and no prizes for guessing what he talked about. With Britain’s EU exit just over a year away, he wants the UK’s future relationship with the bloc to be something akin to the Norway model.

Norway is part of the European Union’s single market, but not the customs union.

State’s property crisis

Too many offices, but not enough houses. That was the take-home message from this week’s instalment of the State’s property crisis.

The most significant development was the Government’s intervention in the residential property market, unveiling a new scheme of local authority mortgages that will be available from next week.

Under the €200 million scheme the Government will finance local authorities to provide mortgages to people who have been turned down by banks. The low-interest rate mortgages will be available to purchasers of properties worth up to €320,000 in the greater Dublin area, Cork and Galway, while the ceiling in the rest of the country will be €250,000.

However, it will be restricted to borrowers with an annual gross income of no more than €50,000, or €75,000 for couples. Borrowers will be able to take a mortgage for 90 per cent of the property’s value.

Meanwhile, developers are still trying to build houses, but it isn’t as easy as you might think.

For one, Cosgrave Property Group is headed to the High Court to overturn An Bord Pleanála’s refusal to sanction the first phase of its massive housing scheme near Bray, Co Wicklow.

While the overall scheme envisages 1,800 new housing units, opening up a new residential belt connecting Old Conna with Dún Laoghaire-Rathdown, the revised first phase includes 438 apartments and 268 houses.

Elsewhere, Clontarf GAA club wrote to An Bord Pleanála opposing plans to build more than 500 new homes in the Dublin suburb of Raheny, joining soccer club Clontarf FC, which has already objected to the proposal by Crekav Trading.

What with all this development going on in and around the capital, the Economic and Social Research Institute (ESRI) warned of the economy being sucked into Dublin at the expense of other regions.

It said the increasing concentration of population and economic activity in Dublin was unsustainable, and, if allowed to continue, would accelerate the current gap in prosperity between Dublin and the rest of the State.

In some ways echoing that, telecoms billionaire Denis O’Brien, at Davos, said Dublin was in the midst of an office-market bubble, and warned there “won’t be enough” people to put in them. Taoiseach Leo Varadkar dismissed the remark.

Busy week for banks

The State could be set for another windfall if the Government heeds the advice of Michael Lavelle, head of Citigroup’s UK and Ireland corporate and investment banking business.

Lavelle told The Irish Times that investors were primed for the State to sell another batch of shares in AIB, after they soared in value since returning to main stock markets in June.

“It’ll be the Irish Government’s decision,” he said. “All we can tell them is, from a capital markets perspective, the markets are ready for them to sell more shares.”

AIB was back in the dock this week, with chief executive Bernard Byrne before the Oireachtas Finance Committee to update it on the tracker mortgage scandal.

Byrne admitted that AIB’s income was probably boosted by about €100 million post the crash in late 2008 after it wrongly switched thousands of customers off low-cost tracker mortgages or applied incorrect interest rates.

Over at Ulster Bank, its chief executive Gerry Mallon announced his resignation to take up a new position as head of Tesco Bank in the UK. It will be the middle of this year before Ulster Bank sources a replacement, and Mr Mallon will remain in his role during that process.

Finally, Bank of Ireland unveiled plans to put its subsidiary New Ireland's central Dublin headquarters up for sale in the coming weeks with a price tag thought to be in the region of €30 million. It also announced the departure of Liam McLoughlin, the head of its Retail Ireland unit, who was a candidate to replace Richie Boucher as group chief executive last year but lost out to Francesca McDonagh.