Reality dawns as Farage ‘warms’ to second Brexit poll
Business Week: also in the news were housing, economic health and a warning on corporation tax
Nigel Farage: he declared the day of the Brexit referendum result as Britain’s “independence day”
Former Ukip leader Nigel Farage produced a head-scratcher this week when he suggested he was “warming” to the idea of a second referendum on Britain’s EU membership.
Farage, who, with typical bombast, declared the day of the referendum result as Britain’s “independence day”, was one of the most prominent Leave campaigners, and has never since shied away from rubbing the noses of his opponents in the result.
“Maybe, just maybe, I’m reaching the point of thinking that we should have a second referendum...on EU membership,” Farage told Matthew Wright on ITV.
“The whole thing?” asked Wright, sounding incredulous.
“I think if we had a second referendum on EU membership we’d kill it off for a generation,” Farage said. “The percentage that would vote to leave next time would be very much bigger.”
Perhaps the reality of what Brexit will mean for Britain has finally begun to dawn on Farage. UK prime minister Theresa May, meanwhile, is still grappling with all that, and met the leaders of London’s major financial firms to convince them to stay.
Britain has stepped up its efforts to persuade the EU to include financial services in a post-Brexit trade deal, and May moved to reassure Goldman Sachs, HSBC, Barclays, Aviva and Prudential that London will not be in the financial wilderness after Brexit.
There was more tension between the negotiating parties after the EU wrote to UK companies telling them to be ready for the UK to become “a third country” with no automatic right to operate in the single market after Brexit.
Brexit secretary David Davis was said to be surprised and a little miffed that the EU was making preparations for the UK crashing out of the EU without a deal. “We are surprised...the UK government is surprised,” was the response from the EU side.
At home the Government is still racing to mitigate the fallout. However, despite much publicised efforts to diversify Irish exports, which rely heavily on the UK market, a report this week indicated there was still much work to be done.
Bord Bia said the UK accounted for 35 per cent of exports, worth €4.5 billion, in 2017, down from 37 per cent the previous year. Overall it was a record year with the total value of food and drink exports up 13 per cent to €12.6 billion.
There were a number of moves to get on top of the housing crisis as Irish Life said it was preparing to enter the residential property market, while the US-based Hines group entered a joint venture to build more than 1,200 apartments in Cherrywood, Dublin.
Irish Life managing director Patrick Burke said the company was at an “advanced” stage of entering the build-to-rent market, with an announcement expected over the coming year.
Hines, meanwhile, has entered into a joint venture with Dutch pension investor APG Asset Management for the Cherrywood project in south Dublin.
The fully serviced “build-to-rent” apartments will be accompanied by street-level shops and cafes in the new town centre. Development costs for this phase will be €450 million.
Separately, Cairn Homes chief executive Michael Stanley told The Irish Times podcast Inside Business that the cost of apartments in Dublin could be lowered by about 20 per cent if they were allowed to construct nine-storey residential blocks in the city centre.
“If you can go from six to nine floors you can make much better use of your land,” he said. “You’ve just added 30 per cent more space on the same site.”
All the while property prices are continuing to rise, although growth moderated slightly in November, according to the latest figures. Prices advanced 11.6 per cent year-on-year compared to an annual increase of 12.1 per cent the previous month.
However, the Central Bank said it did not believe the recent surge in prices is out of line with economic fundamentals. According to the minutes of a meeting in November, published on Monday, there is no need yet for concern about the emergence of another bubble.
Meanwhile, Goodbody Stockbrokers latest housebuilding tracker showed activity in the Republic accelerated significantly last year but official figures are still greatly overstating the level of supply, potentially by up to 100 per cent.
The tracker, which is based on building energy ratings, suggests there were 8,659 new homes built in the first 11 months of last year, 77 per cent up on the previous year. The Government’s official tally for the period was 17,309.
Both business lobby group Ibec and a senior National Treasury Management Agency (NTMA) executive were cheerleading the economy this week – but there was also a stark warning from the Department of Finance.
In its latest quarterly economic outlook, Ibec said the Irish economy had moved beyond the recovery phase, and into a period of “strong and sustainable growth” with expansion forecast to reach 4.2 per cent in 2018.
It painted a positive picture for the economy on almost all fronts, although there may have been bewilderment in some quarters when it added that the “net wealth position” of households has never been better.
Separately, the NTMA said the economy was on its strongest footing since the outset of the millennium even though there were concerns about the impact of Brexit and US corporate tax reform.
“Ireland is probably in the best shape it has been in since about 2001, with few imbalances in the economy,” its chief economist Rossa White said.
Despite White’s comments, a Department of Finance report on tax trends and their impact on the public finances raised concerns about the sustainability of the Republic’s €8 billion corporation tax income.
It said revenue from the business tax had effectively doubled in the past three years amid a massive transfer of multinational assets here and increased corporate profitability generally.
It said nearly two-thirds of tax receipts come from a small number of firms paying in excess of €10 million annually, so almost 40 per cent of total revenue could be linked to just 10 companies. This posed a “significant risk” to the public finances.
Another indication of the health of the economy, however, came from Deloitte, which said the rate at which businesses were going bust has continued to decline. Corporate insolvencies were down 15 per cent in 2017.
One business which has been going from strength to strength in recent years is metal and glass packaging giant Ardagh. Its chairman, Paul Coulson, is positioned to enjoy a €100 million windfall as its ultimate parent group sells a traditionally high-cost bond.