No heroic failure for May in last stand – just failure

Business Week: also in the news were tax warnings; property prices; and media woes

UK prime minister Theresa May reacts as she delivers a speech announcing her resignation. Photograph: Chris J. Ratcliffe / Bloomberg

UK prime minister Theresa May reacts as she delivers a speech announcing her resignation. Photograph: Chris J. Ratcliffe / Bloomberg

 

It was something of a last stand for UK prime minister Theresa May, but in the end there was to be no glorious underdog story to bookend this troublesome chapter of her premiership.

Instead, her “bold new offer” of a parliamentary vote on a second referendum and a customs union with the European Union – a last, desperate gambit to win support for her deal – blew up in her face before she could get the pin out of the grenade.

Despite attempts to woo MPs on the Labour benches with promises to guarantee alignment with the European Union on workers’ rights and environmental standards after Brexit, Jeremy Corbyn was in no mood to offer May a way out.

Corbyn called the proposals a rehash of the government’s position during earlier cross-party talks, and, before long, May was under fire from all sides. Crucially, a host of Conservative Brexiteers who previously voted for the deal now deserted her.

This time, May could see the writing on the wall. “I have done everything I can to convince MPs to back that deal,” she said from the steps of Number 10, before announcing she will resign as leader of the Conservative Party on June 7th.

She will remain as prime minister until her successor is chosen, but, for now, the United Kingdom is faced with yet more uncertainty. Boris Johnson, the face of the official Brexit campaign in 2016, is the favourite to succeed her.

In Dublin, the mood has darkened with some political figures now wondering if the UK crashing out without a deal can be avoided. Earlier in the week, Minister for Foreign Affairs Simon Coveney warned the Cabinet that a no-deal Brexit was more likely than ever.

Taoiseach Leo Varadkar for his part held his ground and said an orderly exit was still the most likely outcome, but nonetheless warned businesses not to assume that Brexit is “going to be all right on the night”.

From the Government’s perspective, at least there was some cause for cheer in the latest labour force survey from the Central Statistics Office which showed the number of people in employment reached a record high in the first three months of the year.

Employment in the State surged 3.7 per cent in the first quarter to just above 2.3 million compared with the same quarter the year before. “It has never been higher than that,” said CSO senior statistician Edel Flannery.

Minister for Finance Paschal Donohoe will not be resting on his laurels though, warning this week that changes in global corporation tax are on the way and will bring major challenges for Ireland.

He said the State must be open to new approaches. These should recognise that value can be created by digital activities, meaning big companies would pay some tax in markets where they have most of their consumers, potentially cutting the tax take here.

Property market remains a threat

While Brexit and international tax reform may be the biggest threats to the economy, more than 10 years have passed since the property crash that plunged the State into deep recession, and those same vulnerabilities in the market remain.

That’s according to the OECD, which warned this week that “rapid changes in prices” and the influx of foreign investors could create a new source of risk. Such a surge in prices, it said, could lay the foundation for another boom-to-bust cycle.

Separately, new figures from the International Monetary Fund showed Dublin experienced the strongest growth in property prices among 32 countries and cities between 2013 and 2018.

Despite the rapid growth, the risk of a repeat of Ireland’s boom-bust scenario is seen as unlikely based on the IMF’s tool for predicting the odds of a property crash. Indeed, property price growth has finally started to slow – at least in the capital.

Nonetheless, Irish house prices were described as “a concern” by KBC Bank Ireland chief executive Peter Roebben. He told the Oireachtas committee it has become more difficult for many would-be buyers to secure a mortgage following a surge in values.

Staying with property, Ires Reit, the largest private landlord in the State, has been named preferred bidder for a portfolio of 815 apartments located across the State. It is set to pay about €285 million, making it the largest single property sale this year.

The company is separately proposing to sell 43 apartments for €21.13 million to Dún Laoghaire-Rathdown County Council for social housing. It will cost the council €491,503 on average for each apartment in the Rockbook development in Sandyford.

Elsewhere, property investor Hibernia Reit hopes to begin talks with South Dublin County Council shortly on rezoning 37 hectares (92 acres) at Newlands Cross for which it paid €30 million. The council previously rejected pleas to rezone it from agricultural use to allow residential building there.

More contraction in the media

The Irish media industry has rarely, if ever, known rougher waters than those it has been navigating in recent years, and it received yet another blow this week as Rupert Murdoch’s News International announced major job cuts at the Times Ireland edition.

The paper’s print edition is to cease publication, while just three staff positions out of about 20 are to be retained. Current employees have been invited to reapply for these roles.

To make matters worse, staff will not be entitled to the bare minimum statutory redundancy that’s on offer unless they have worked for the company for more than two years. Those who do not meet the threshold will only be paid their last pay cheque.

Elsewhere, Mediahuis, the Belgian group that has agreed a €145.6 million deal to buy Independent News & Media (INM), has flagged that it will continue making cuts at the Irish publisher’s print operation to keep it profitable.

It made the comments in a letter to INM investors, which was included in a series of documents released ahead of meetings later this month at which INM will seek shareholder approval for the deal.

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