Divorce talks between the United Kingdom and the European Union can move on to phase two after EU leaders yesterday judged that “sufficient progress” has been made on the rights of citizens, the Brexit divorce bill and the Irish Border.
That was despite some confusion earlier in the week when UK Brexit secretary David Davis said last week's deal on the Border was more "a statement of intent" than a legally binding treaty.
Davis’ comments caused uproar in Dublin and Brussels. He subsequently claimed he had been misinterpreted and that what he really meant was that the deal needs to be swiftly translated into a legal text.
The Government and its EU partners will be relieved to have all that behind them for now – but the toughest parts of negotiating an orderly withdrawal for the UK are still to come.
The EU made clear this week that phase two – talks on a future EU-UK relationship that will include trade – will not begin until March. Indeed, Minister for Foreign Affairs Simon Coveney said the talks could take four to five years.
In Westminster, British prime minister Theresa May was left embarrassed after suffering a first parliamentary defeat in the European Union (Withdrawal) Bill after an alliance of rebel Conservatives and opposition politicians pushed through an amendment demanding a meaningful vote by MPs on the final deal.
Meanwhile, three separate reports this week warned about the serious risk Brexit continues to pose to the Irish economy, notwithstanding the progress that has been made to date.
In its latest quarterly commentary, the ESRI highlighted the increasingly uncertain outlook for the UK economy as the chief downside risk to growth here. The think tank also warned that domestically-owned firms have a much greater exposure to the UK economy than multinationals operating here.
The Central Bank also highlighted the ongoing Brexit risk in its latest macro-financial review, noting the final deal was still subject to complex negotiations, which could swing in different directions.
And the National Competitive Council said the economy was at a critical juncture and steps must be taken to improve the State's competitiveness given the wide number of external threats that could impact growth.
The council name-checked a range of policy areas including trade, investment and skills. It also warned of an overreliance on a concentrated number of multinationals.
It’s not all bad though. S&P Global Ratings, owned by the same US group that is behind the Standard & Poor’s name, became the latest financial company with London operations to choose Dublin as a post-Brexit European hub.
It could not confirm the number of jobs that would be created in Dublin, but said it would create “a number of managerial, analytical and support positions”.
That being said, an analysis by the Financial Times found the number of jobs moving from London after Brexit is likely to be much lower than previously thought.
The figure the newspaper arrived at for the UK’s biggest international banks was fewer than 4,600 – just 6 per cent of their total workforce in the financial centre. That contrasts with original claims that tens of thousands of jobs could move.
Back home, and the Central Bank rejected criticism that its overly cautious approach to regulation was hampering the State’s ability to attract post-Brexit business.
“Debates about the bank’s role in promotion and attracting industry are not appropriate in light of what happened during the crisis,” deputy governor Sharon Donnery pointed out.
Her comments came in the wake of a letter from Minister for State with special responsibility for financial services Michael D’Arcy, which highlighted the Central Bank’s “unhelpful attitude” to processing Brexit-related investment.
Facebook tax restructuring impacts on Dublin
Facebook, which last year diverted more than €12 billion of global revenues to the Republic, said on Tuesday it was restructuring its tax practices following EU pressure.
The tech giant is to begin the process of restructuring its non-US operations so that all revenues from larger advertisers will be booked in the countries where the ad was sold, instead of Dublin.
That means the corporation tax on the profits from those ads will be paid in those countries, instead of, as is currently the case, in the Republic.
It was a major coup for the European Commission, which has been bent on reining in multinational tax planning that deprives states of billions in taxes, something many agencies have said perpetuates a global cycle of inequality.
The European Commission said its drive to put pressure on digital giants to pay more corporation tax was “having a real impact”, following the announcement. “We welcome any initiative that brings declared tax revenue closer to where value is created,” said an official.
Campaigners against multinational tax avoidance said Facebook’s decision would increase pressure on other tech giants to follow suit.
Meanwhile, the Paradise Papers were again in the news briefly, as AIB chief executive Bernard Byrne denied claims in the trove of documents that the bank provided advice to offshore customers on how to avoid tax.
Byrne told an Oireachtas committee that a report in The Irish Times was wrong when it reported that AIB declined to give the Revenue Commissioners access to data on its offshore customers when responding to a court order in 2015.
During the same hearing, Byrne also said that now would be a good time for the Government to sell its interest in AIB should it wish to do so. “These things come and go,” he said. “There is an opportunity there that looks attractive.”
O’Leary to recognise trade unions – with conditions, of course
Ryanair chief executive Michael O'Leary proved again his flair for the dramatic, announcing Friday that the airline would, for the first time, recognise trade unions – with conditions – after Irish pilots at the airline voted overwhelmingly in favour of industrial action on Wednesday.
The row is over a campaign by Ryanair pilots for a new collective bargaining system to replace the current employee representative councils which negotiate for staff at each of its 80-plus bases in Europe.
Pilots in Germany are likely to strike within days, a move timed to coincide with planned stoppages by their colleagues in the Republic and Italy, where pilots have already carried out a four-hour stoppage.
The airline’s move was enough to see the pilots shelve planned disruption of the flight schedule in the run-up to Christmas.
Housebuyers beware
Finally, there was yet more cause for alarm among housebuyers.
Contracts for new homes previously included a clause stating the agreement was “subject to loan approval”, which protected the buyer from losing their deposit if the lender did not approve the loan when it came time to draw it down.
It emerged this week that an increasing number of new-build developers are no longer including the clause, despite a warning from the Law Society that it is "unsafe" for buyers to pull the trigger in the absence of the clause.
To make matters worse, the latest Central Statistics Office figures show Dublin house prices have now risen by 86 per cent since 2013, and are just 22 per cent off the peak.
