Your business week: Varadkar dangles customs union carrot over Brexiteers
More jobs for Ireland, banking culture and executive pay were also in the spotlight
Taoiseach Leo Varadkar makes a Brexit statement at Government Buildings. File photograph: Dara Mac Dónaill/The Irish Times
Taoiseach Leo Varadkar this week continued efforts to coax British MPs towards a consensus that might solve the Brexit impasse, when he insisted Britain would have a “meaningful” say in future trade deals if it enters a customs union with the EU.
The argument against a customs union from many in Westminster has been that the UK would not have any say in trade deals struck between the EU and other trading blocs in such a scenario, but Varadkar described the prospect as “win-win for the EU and UK”.
His comments were seized upon by British Labour leader Jeremy Corbyn, who is pushing for such a policy in his talks with prime minister Theresa May as they attempt to reach a cross-party solution to Brexit.
While the Brexit cliff edge has been pushed back to the end of October, businesses nonetheless remain in firefighting mode as the clock ticks down. For one, a no-deal Brexit could hit a significant part of co-op Aurivo’s milk-processing business.
Its chief executive, Aaron Forde, warned that Brexit posed “considerable challenges” to the co-op, as 16 per cent of the more than 400 million litres of milk it processes a year comes from Northern Ireland.
The delay to Brexit also means businesses will be reluctant to recruit staff to handle the implications of the UK’s exit because of uncertainty around the timing, according to Tom Thornton, Brexit spokesman for the Irish International Freight Association.
Separately, the latest figures from the Central Statistics Office showed Irish exports to the UK jumped 16 per cent in February despite the uncertainty surrounding Brexit.
Goods exports to the UK, the Republic’s largest EU trading partner, increased by €166 million to €1.2 billion in February compared with the same month last year. That was driven by exports of mineral fuels, lubricants and related materials.
Meanwhile, Minister for Finance Paschal Donohoe said he expects an additional 50,000 jobs to be created in the Irish economy this year, driving employment to new record levels as we close in on full employment.
In less welcome news for the Government, it emerged that the European Commission held in-depth talks with Irish authorities late last year about whether Google complies with rules limiting tax incentives given by individual European countries.
Elsewhere, a row is brewing between the Department of Public Expenditure and the National Lottery over €16 million in unclaimed prize money. It dates back to 2014, when the lottery was privatised and sold to Canadian-owned Premier Lotteries Ireland (PLI).
PLI inherited €16 million in unclaimed prize money from the previous licence holder, An Post. It believes it is entitled to use the money on promotions, but the department is insisting it should go to the exchequer. The Attorney General has been called in to advise.
New board seeks to change banking culture
The new Irish Banking Culture Board began its work this week, as Minister of State for Finance Michael D’Arcy warned banks they are on their “last chance” to restore faith in the industry following a litany of scandals.
Retired judge John Hedigan will chair the board of the new body for three years. He described its establishment as “just the beginning” in a long process of consultation and reform to achieve “real, lasting and effective cultural change”.
One of the first things the new board did was to publish the results of a survey which found that more than one-third of staff in Irish banks wanted to raise a concern at work over the past year.
The concerns mainly related to their company not acting in the best interests of customers, but more than two in five who had concerns failed to speak up, with most fearing that doing so would be held against them or that nothing would happen.
Another initiative aimed at improving banking culture is a Government plan to introduce laws to make top financial executives individually accountable for failings under their watch.
Central Bank head of policy and risk Gerry Cross said the proposed rules “will be very helpful and instrumental in helping drive cultural change” in financial companies and make it more difficult for bankers to “circle the wagons” in times of crisis.
Meanwhile, the competition to find the next governor of the Central Bank has been narrowed down to a shortlist of four candidates, including the bookies’ favourite, deputy governor Sharon Donnery.
Two other names believed to be on the list are Andrew McDowell, vice-president of the European Investment Bank, and Colm O’Reardon, deputy secretary general of the Department of Health. Incumbent Philip Lane is to start his new job with the ECB soon.
Lane was in UCD this week, where he told the school of economics that the regulator is seeking powers from Government to demand that banks hold extra capital to safeguard against hidden risks to the economy.
Lane identified dependence on multinationals and the potential consequences of both global warming and efforts to prevent it as possible sources of trouble ahead.
Staying with the banks, customers of Ulster Bank are set to pay more to use its facilities. High-frequency users of the bank’s contactless, chip-and-pin, direct debit, ATM withdrawal and online facilities will face extra fees of up to €47 a month.
Top executives raking it in
The salaries of some of the top executives in Irish business were under scrutiny this week, as it emerged Cairn Homes chief Michael Stanley received total remuneration of €920,000 last year despite the homebuilder losing 43 per cent of its share value.
The figure, which included a €382,000 annual bonus, compared with remuneration of €797,000 in 2017.
Elsewhere, Irish food group Glanbia is trying to increase the salary of chief executive Siobhán Talbot by 22 per cent to €1.05 million and that of her finance director Mark Garvey by almost 15 per cent to €581,000 – but it’s expected to face opposition.
Glass Lewis and Institutional Shareholder Services, the two most influential advisers to major international investors on corporate governance issues, advised clients invested in Glanbia to reject the group’s remuneration report at its annual general meeting next week.