Swinging Brexiteers told to lift their heads from the sand

Business Week: also in the news was Intel; AIB; the economy; and housing supply

UK foreign secretary Boris Johnson who was in Dublin this week for the Pendulum business conference. Photograph: Nick Bradshaw

UK foreign secretary Boris Johnson who was in Dublin this week for the Pendulum business conference. Photograph: Nick Bradshaw

 

UK environment secretary Michael Gove this week said hardline Brexiteers pushing for an improved withdrawal deal with the European Union were like “mid-50s swingers waiting for Scarlett Johansson to turn up”.

In other words, it’s never going to happen.

One such swinger is the former UK foreign secretary Boris Johnson who was in Dublin this week for the Pendulum business conference. Johnson called the Northern Ireland backstop a “convenient fiction” that had been exploited by the EU to trap the United Kingdom.

He said the backstop – the mechanism to guarantee there will be no hard border in the North even in the event no trade deal is agreed – could be replaced with a back-up “standstill agreement” whereby there would be no tariffs on cross-Border goods trade.

It was just the latest Hail Mary from those elements within the Tory party and the British political establishment bent on forcing the hardest possible Brexit. Earlier, the DUP called the backstop “poison” and reiterated its call for it to be abandoned.

All the while UK prime minister Theresa May is desperately trying to shore up support for her deal, which the House of Commons is finally set to deliver its verdict on next week.

May called the leaders of Unite and the GMB – Britain’s two biggest unions – to seek support for the deal after her government indicated it would back an amendment to protect labour and environmental standards.

London also tried to break the impasse with a suggestion that a future Stormont executive could veto aspects of the Irish Border backstop, but Minister for Foreign Affairs Simon Coveney dismissed the idea.

If May was in any doubt about the scale of the task facing her to get the parliament onside, two chastening defeats in the House of Commons this week will have put her to rights.

First, MPs voted to restrict her taxation powers if the UK leaves without a deal, before she suffered a second defeat that has forced her to come up with and present a Plan B in the event her withdrawal deal founders.

Meanwhile, the Irish Farmers’ Association said beef farmers are facing a “potential Armageddon” from Brexit and will need substantial EU compensation for losses, while Enterprise Ireland said 25,000 Irish jobs are vulnerable to the impact of a hard Brexit.

On the bright side, EY said Dublin continues to be the top location for financial services companies looking to relocate operations from the UK, with 27 groups having committed to moving staff or activities here since the June 2016 referendum.

Indeed, the Central Bank said it has been forced to “re-prioritise” its normal supervisory work as the regulator draws on resources to deal with a spike in authorisation applications.

State back on its feet 10 years after the crisis

Veteran business executive Gary McGann, who was a director of Anglo Irish Bank when it collapsed a decade ago, this week conceded that the bank’s board at the time was collectively “not up for the job”.

McGann, who was speaking at the Pendulum conference, said he believed there was “not enough financial risk averse bankers on the board” of Anglo, the collapse of which eventually cost taxpayers €29.3 billion.

Ten years on and – while the State is still picking up the pieces – there are signs of renewed confidence in the economy. For one thing, Intel, the giant microchip manufacturer, is to significantly expand its base in Leixlip.

The multinational will begin preparatory work this month, with thousands of construction jobs created initially and hundreds of technician roles once the new facility is built. The investment plan is likely to run into billions of euro over a period of years.

There was good news also for staff at State-owned AIB where the majority of its 10,000-strong workforce is set for a 3 per cent pay increase this year, following negotiations between the bank and the Financial Services Union.

Elsewhere, the State’s first bond issuance of the new year was the most popular Irish syndicated bond sale ever, attracting a total order book of some €18.1 billion, the largest ever received.

The National Treasury Management Agency beat expectations by raising €4 billion in a syndicated sale of a new 10-year benchmark treasury bond maturing in May 2029.

But before you start getting carried away, business lobby group Ibec predicted a major slowdown in growth this year as the economy approaches full capacity and “cost competitiveness erodes”.

In its latest quarterly outlook, it forecast headline growth of 4.1 per cent for 2019, down from the near 8 per cent recorded in 2017. That was lower than the Government’s forecast of 4.2 per cent.

New year, same problems

It might be a new year, but many of the same problems persist for the Government.

The housing crisis remains the key issue domestically, but the decision-makers on Merrion Street will be hoping that by this time next year the tide will have been somewhat pushed back.

About 22,000 dwellings are expected to be completed in the coming 12 months, which is significantly below the 35,000 or so we need on an annual basis to keep up with demand, according to the Economic and Social Research Institute’s calculations.

Listed builders here will offer about 2,000 new homes for sale or rent this year, according to an Irish Times analysis. Several companies have tapped investors for cash to build new homes by launching on the Irish Stock Exchange.

Meanwhile, a branch of one of the Republic’s best-known building families is seeking fast-track planning permission to build 265 apartments for rent. Durkan (Davitt Road) Ltd has just applied to build on the site of the old Dulux Paints factory in Drimnagh.

Finally, developer Ardstone is seeking permission to build 240 homes in Cork at a cost of more than €50 million through the same fast-track planning system. It’s poised to launch various phases of developments in Dublin, Galway, Kildare and Wicklow shortly.

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