May offers to walk the plank but Brexit deal still founders

Business Week: Big news for several Irish businessmen; mortgage woes; and housing

Boris Johnson said he would support Theresa May’s deal after she laid out a timeline for her departure. Photograph: Getty Images

Boris Johnson said he would support Theresa May’s deal after she laid out a timeline for her departure. Photograph: Getty Images

 

UK prime minister Theresa May gave her Brexit deal one last throw of the dice this week as she offered her head on a plate in exchange for its backing by Conservative rebels.

Many of her critics had been clamouring for such an outcome in the early part of the week but, despite winning over a few hardliners, it wasn’t enough to get it over the line after the Democratic Unionist Party and others held their ground.

Boris Johnson said he would support May’s deal after she laid out a timeline for her departure, while Jacob Rees-Mogg said he would follow suit if the DUP did not oppose the deal. But that was always going to be a big ask.

DUP leader Arlene Foster said her party “regrets” it has been unable to support the deal while it “poses a threat to the integrity of the UK”.

In truth, May’s authority had been hanging by a thread for some time. MPs voted to take control of Brexit away from her government by staging a series of indicative votes on Wednesday on other options that included customs union membership and a second referendum.

None of the votes won a majority, but it’s thought they might form the basis of the start of a process to find a version of Brexit that would command a majority. Meanwhile, 10 cabinet ministers are considering putting themselves forward to take over from May, according to reports.

At home, there were three separate warnings for Ireland of what could be around the corner. First, a survey of 20 countries by Standard & Poor’s found the Republic tops the international rankings in terms of states most exposed to Brexit.

The Economic and Social Research Institute said a no-deal Brexit would derail the Government’s plan for tax cuts in the next budget, while growth would be slashed by more than two-thirds to 1.2 per cent this year.

Such a scenario would also see the Government’s budget surplus of last year move back into a deficit of 0.5 per cent, or €1.5 billion, necessitating further borrowing. It called for a neutral budget in October, something that would not sit well in Government circles ahead of a possible election.

A separate report by the ESRI and the Department of Finance said a disorderly Brexit would put up to 80,000 jobs at risk, delivering a deep and damaging shock to the economy.

Big week for Irish businessmen

It was a stellar week for a number of Irish businessmen, as the Collison brothers announced the creation of hundreds of Irish jobs, while beef baron Larry Goodman’s ABP Food Group announced a deal to export more beef to the lucrative Chinese market.

Stripe, the online payments company founded by Patrick and John Collison, intends to create the additional engineering jobs in Dublin after securing an e-money licence from the Central Bank of Ireland.

The licence will allow the company to continue to process payments for users across Europe regardless of the outcome of Brexit negotiations.

Meanwhile, the Goodman family’s ABP, one of the largest food processors in Europe, reached a deal to extend its range of beef products for sale on Chinese online retailer JD.com.

ABP first struck a deal to export beef cuts to China last July, weeks after the Republic became the first European state to gain access to the massive Chinese market, where increasing affluence has boosted demand for meat.

Elsewhere, a group that includes US cable television tycoon John Malone agreed a deal to buy the five-star Powerscourt Hotel in Enniskerry from a company controlled by Tetrarch Capital for more than €50 million.

There was bad news for thousands of Irish consumers, who had their travel plans in the months ahead thrown into disarray after Iceland’s Wow Air ceased operations and cancelled all flights with immediate effect.

The airline wasted no time washing its hands of its now former customers in its statement: “Wow Air has ceased operation. All Wow Air flights have been cancelled. Passengers are advised to check available flights with other airlines.”

Aer Lingus said it would offer so-called “rescue fares”, or discounted tickets, until April 11th to passengers who are due to fly on routes the Irish airline covers, if available.

Mortgage scandal to cost Ulster Bank

Another Irish bank was in the dock this week after thousands of mortgage holders were overcharged on their interest rate on home loans drawn down between 2001 and 2008.

This time it was Ulster Bank, with 9,800 mortgage account holders to receive refunds of €2,300 on average, plus compensation ranging from €100 upwards. Most will receive compensation of €500, the bank said.

It gets even worse for Ulster Bank too as it confirmed it would not seek repayments from 8,500 accounts that were undercharged on their interest rate in error. The bill for the refunds alone will run to €22.5 million.

Sticking with house-buying, the latest figures from Banking and Payments Federation Ireland showed more than €750 million worth of mortgages were approved in February with the lion’s share for first-time buyers.

A report by the OECD found that, contrary to perceptions, the rate of home ownership in the Republic corresponds very closely to the international average. It showed 71 per cent of Irish households either owned their dwelling outright or with a mortgage in 2016. This compared to an OECD average of 70 per cent.

Meanwhile, Central Bank governor Philip Lane said he had “grave concerns” about Sinn Féin’s No Consent, No Sale Bill, which seeks to prevent banks from selling problem loans to investment funds without borrowers’ permission.

If enacted, the legislation would push up interest rates and weaken the resilience of the financial system, he told an Oireachtas committee. The Bill, brought forward by Sinn Féin’s Pearse Doherty, also has parliamentary backing from Fianna Fáil.

In the rental sector, up to 600 apartments are to be built near Shankill in south Dublin for low- and middle-income workers at 30 per cent below market rates, under the first “cost rental” scheme from the Land Development Agency.

Elsewhere, homebuilder Glenveagh Properties agreed to sell 118 properties in Balbriggan and Donabate in Dublin to Ires Reit for €38.2 million. The deal will bring the portfolio of Ires Reit, Ireland’s largest private landlord, above the 3,000 mark.

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