Brexit
This week marked the first full week of formal campaigning in the upcoming UK referendum on EU membership – and there was wall-to- wall coverage as the ifs and buts of whether they should stay or go played out.
Britain's chancellor of the exchequer George Osborne kicked things off with a treasury analysis that painted a very bleak picture for Britain. He said its economy would suffer permanent damage, leaving it 6 per cent smaller by 2030 – the equivalent of £4,300 (€5,400) a year for each household.
“Britain would be permanently poorer if we left the EU,” he said in a speech. “Under any alternative we’d trade less, we’d do less business, there would be less investment, and the price would be paid by British families.”
But what about Irish families? The potential effect of a Brexit on the Republic continues to spark debate, with the main concern relating to how it would affect trade between the two states.
British work and pensions secretary Stephen Crabb warned it could be impossible to make special tariff arrangements for the Republic if the British voted to leave.
He said that if a post-Brexit UK was relying on its membership of the World Trade Organisation (WTO) to regulate trade with the EU, it would have to offer the same terms to all WTO members.
“So if we wanted to offer low tariffs to our neighbours in Ireland, we’d have to do the same for all other 160 countries in the WTO,” he said.
Economist John Fitzgerald pointed to an ESRI study in November which suggested that if customs barriers were put up following a Brexit, it could lead to a reduction in trade between Ireland and the UK of up to 20 per cent.
So, just how bad could it for the Republic if a Brexit came to pass? German government MP Jens Zimmermann, who is a Social Democrat member of the Bundestag finance committee, said it would be akin in relative terms to the damage Germany would suffer if France left the union.
Highlighting the strong economic relations between Britain and the Republic, he raised the notion of a “Frexit”, or French EU exit, and argued that such a move would be deeply damaging for Germany.
“France is by far the largest exporter and importer of Germany,” he said.
“If we would lose France from the EU that would be, from an economic perspective, a huge disaster for Germany. So one might compare that to the situation Ireland is in right now.”
Boom-era risks
Those same markets will also be paying attention to the ongoing political situation, and keeping an eye on economic indicators. The Republic's year-end budget deficit came in higher than the outgoing Government's official forecast, due to an unexpected ruling by Eurostat, the EU statistical agency.
The 2015 figure was still low enough to ensure Dublin will no longer be subjected to stringent fiscal oversight from Brussels for running an excessive deficit, but the figure was still almost 1 percentage point higher than foreseen by the Government.
It had been proceeding on the basis that the surge in tax receipts and GDP growth last year would bring the deficit to 1.3 per cent. At issue in Eurostat’s ruling was its formal classification of a one-off share transaction in the nationalised Allied Irish Banks. The National Competitiveness Council’s annual Cost of Doing Business in Ireland report will not have made for pleasant reading in Government circles. It warned of a return to boom-era risks to the entire economy from the dysfunctional property market.
In a strong critique of escalating costs in a variety of sectors, it found business clients pay 80 per cent more for modest commercial loans than the euro zone average.
It also took issue with increasing levels of industrial unrest and high costs for childcare, insurance, legal, transport and energy services.
All of that after as the International Monetary Fund’s steering group urged member countries to boost “growth- friendly” spending and said new lending tools to help deal with slowing global growth should be explored.
Intel
There was some potentially bad job news for workers at Intel’s base in Leixlip as it announced plans to cut 12,000 jobs, or 11 per cent of its global workforce, due to falling sales of personal computers.
The company is one of the biggest multinational employers in the Republic, with 4,500 employees at its base outside Leixlip, Co Kildare, a further 200 at a research and development facility in Shannon, Co Clare, and hundreds more in Cork.
There is no information yet on the likely impact on the company’s Irish employees, but it has said staff will be informed in the next 60 days. Shares in the tech giant fell 2.6 per cent in late trading on the US stock market after the company lowered its forecast for revenue for the year.
Despite the Intel news, there were more positive job developments in other areas. Healthcare firm Opko, headquartered in Miami, said it would create 200 highly-skilled roles over the next five years in Waterford.
In Carrigtwohill, Co Cork, up to 70 jobs are to be created at medical science and technology company Merck. The positions have become available following the official opening on Tuesday of manufacturing and R&D facilities.
Elsewhere, English digital marketing company SLM Connect said it would create 125 jobs in the Gaoth Dobhair business park, Co Donegal.
In Dublin, US digital marketing firm Search Optics said it would create 100 jobs over the next two years.
The announcement was made as the company opened its new European, Middle Eastern and African headquarters off Clanbrassil Street in Dublin.
Pay at the top
Fresh from news last week that newly-merged Paddy Power Betfair plans to cut 300 jobs from its Irish operations, the company announced that it will pay chairman Gary McGann €450,000 this year, making him one of the best-paid non-executives at an Irish plc.
Separately, the Paddy Power’s annual report for 2015 revealed it paid its former chief executive Andy McCue more than €3.7 million in salary, benefits and shares in 2015, made up of a €700,000 salary, €536,000 bonus, €173,000 in pension and benefits and €2.312 million in shares.
High pay has a tendency to ruffle feathers, and none more so these days than among the farming community. Following the ructions at the Irish Farmers’ Association, new accounting rules obliged Ireland’s largest dairy co-op to publish details of executive pay for the first time.
Ornua, formerly the Irish Dairy Board, said in its annual report that total remuneration for senior executives amounted to €4.4 million in 2015, which included €2.3 million in basic salaries and €1.1 million in performance-related bonuses.
This was down from €4.86 million in 2014. Total directors’ fees, spread between 14 individuals, amounted to €509,000 in 2015, up 44 per cent on the €352,000 paid in 2013.
Irish Creamery Milk Suppliers’ Association deputy president Pat McCormack said the news couldn’t have come at a worst time, and that farmers would “not be able to relate to someone who’s on that kind of money”, in the context of current milk prices.
